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Hedge Fund Elliott Confident In Samsung’s ‘World-Class Brand’

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NEW YORK: US hedge fund Elliott Management expressed confidence in South Korea’s embattled Samsung group, saying that despite the crisis over its fire-prone Galaxy Note 7 smartphone it remains a “world-class brand.”

Elliott units Blake Capital and Potter Capital – which together hold 0.62% of Samsung Electronics – only a week ago called for the company to be split in two and its boards to be revamped.

But on Oct 12 Blake and Potter said in a statement that they saw the Note 7 problem could result in reforms in the company.

”The recent issues surrounding the Galaxy Note 7, while unfortunate, do not diminish our view that Samsung Electronics is a leading global technology company with a world-class brand,” Blake and Potter said.

”We believe that the company’s forthcoming new leadership can build on the company’s initial response to this situation by adopting best-in-class operational and corporate governance improvements.”

The statement came after Samsung halted production of the Note 7 over widespread reports of battery fires, and cut its profit forecast by one-third as it expects huge costs from phone recalls and lost market share.

As the Note 7 crisis expanded, last week the Elliott fund said in a letter that Samsung suffered from a long-term undervaluation in the equity market, saying it should divide into separately listed holding and operating companies.

The letter reignited a 2015 clash between Samsung and Elliott over the merger of two Samsung affiliates.

”Now is the time for real shareholder value, corporate governance and transparency improvements, which we believe will help Samsung Electronics achieve an equity market valuation that properly reflects its first-class portfolio of businesses,” the October 5 letter said. — AFP


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