SDS says it won’t boost stock pricesSamsung SDS, which recently announced its plan to spin off the logistics outsourcing department, rejected small shareholders’ requests made last week to roll out additional measures to pump up the company’s plummeting stock price.
“After mulling over the issue with experts and board members, we have decided not to roll out plans such as share buybacks or distributing interim dividends,” the IT solutions unit of Samsung Group said in a regulatory filing on Tuesday.
The decision was made after concluding there could be “innocent victims” who may be affected by some investor-friendly plans.
“We thought it would be more advisable to use the cash acquired from the spinoff to roll out actions like an M&A to enhance the company value,” the filing said.
Issuing more shares was considered undesirable by the company, as an increased number of stocks does not directly translate to a stock price boost.
“Although we could not reflect the shareholders’ request at this time, we will look through investor-friendly plans such as raising the dividend in the future,” it said.
The responsive regulatory filing comes a week after a group of individual shareholders visited the company’s headquarters in Jamsil-dong, southern Seoul, on June 14 for the second time in order to show their strong discontent with the company’s upcoming plan to spin off the logistics department.
It asked the company to come up with concrete measures that would protect shareholders from further loss, as the stock price has been plummeting ever since the news was released.
On June 7, Samsung SDS announced it would spin off the logistics department, one of the group’s main businesses, in order to raise the sector’s global competitiveness by compiling Samsung Group’s related departments into one.
It also said Samsung SDS has hit a limit, relying solely on projects generated within the group affiliates. It said therefore, it is in a “desperate situation” and must expand into the external market, and in order to do that, it will have to concentrate all the related businesses under one roof.
“The logistics business is facing difficulties in recruiting a workforce and gaining a foothold in foreign markets with the current company image, which focuses only on IT services,” the regulatory filing said.
Samsung SDS’s stock price has been on a roller coaster ride since rumors of the spinoff plan emerged in early June. The company shares, which were as high as 174,000 won ($150) on June 1, plummeted to 142,000 won per share on June 3, the day when the company officially said it is considering splitting the logistics department.
On Tuesday, after SDS confirmed it would not roll out any additional plans to boost the stock price, its share price closed at 150,500 won, down 1.31 percent from the previous trading day.
BY JIN EUN-SOO [firstname.lastname@example.org]
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