After victoriously taking on a sovereign nation with an imploding economy, Paul Singer is reportedly looking to stay sharp by taking on a quasi-sovereign electronics corporation with exploding phones.
Samsung Electronics Co. is being urged by activist investor Elliott Management Corp. to restructure a business that spans Galaxy smartphones, televisions, semiconductors, screen displays and other consumer electronics.
In a 10-page letter and 31-slide deck released publicly and to Samsung’s board on Wednesday, affiliates of Elliott -- Blake Capital LLC and Potter Capital LLC -- called on the company to streamline and separate into two, conduct a tender, dual-list its resulting operating company on a U.S. exchange such as Nasdaq, pay shareholders a special dividend of 30 trillion Korean won ($27 billion) as well as ongoing regular dividends, and improve governance by adding three independent board members, among other steps.
Oh, is that all? You've got some nerve, P-Singz...
The detailed proposal comes at a critical time for the South Korean electronics conglomerate. The company has been operating without longtime Chairman Lee Kun-Hee, who has been hospitalized, while also trying to navigate the aftermath of the disastrous launch of its latest Galaxy Note smartphones, which had to be recalled after batteries were bursting into flames.
Asking a company going through some public turmoil to shake shit up is pretty vanilla stuff for activist investors, so it's actually weird at first blush to see Paul Singer engaged in such bland confrontation. But if you look just a little deeper you'll see that Samsung is actually a pretty fun and whacked-pout scene.
Samsung's aforementioned 74-year-old chairman and South Korea's richest man Lee Kun Hee may or may not be in a coma and the company has had to deny that he is maybe dead since 2014. Other fun facts about the Samsung chairman include a 2008 slush fund scandal that forced him to the sidelines for a few years, a book written by his former lawyer accusing him of some staggeringly impressive corruption, and some videos allegedly showing him with a surfeit of hookers over the course of many years. Running the show at Samsung these days is the chairman's son, vice chairman Lee Jae-yong, a 48 year old guy who is seen as mercifully was more low-key than his dad but - due apparently to cultural traditions in Korea - cannot actually step up until his father is actually dead.
Basically, the Lees are like if the Kennedys owned Apple.
So now you're probably beginning to see why Paul Singer is probably so thirsty to fight with Samsung. A dynastic family culture managing a $260B+ market cap and suddenly on the ropes thanks to some cell phone batteries that can't stop 'splodin? Oh baby, it's Singer time!
Now if only the Lees had their own naval force that Paul could repossess as leverage...