BUSINESS

Samsung SDS chief tries to assuage employees’ concerns over split-off plan

By Kim Young-won

IT solution provider reaffirms push for business split-off

  • Published : Jun 7, 2016 - 15:36
  • Updated : Jun 8, 2016 - 09:43
Amid mounting controversy over IT solutions firm Samsung SDS’ plan to split its businesses, its chief executive has asked his employees not to be swayed by speculations on the proposal.

In posts on the company’s online bulletin board last week, Samsung SDS CEO Chung Yoo-sung told employees to “stay in your position, and continue to carry out your duties.”


Samsung SDS CEO Chung Yoo-sung (Samsung SDS)

The remarks seemed to be aimed at appeasing employees who could have been agitated by the latest development of the company’s plan to split off one of its core businesses.

They, however, may not have been effective as many employees expressed worries over the proposed plan and the fierce objection of investors.

“A group of small investors are planning to file a lawsuit against the company while the stock price has hit a record low,” a Samsung SDS employee said.

“The CEO’s remarks are especially infuriating as it appears he is telling employees to stand still and do nothing,” the employee added.

The IT solutions business arm of Samsung Group said Tuesday that the split-off of its logistics solution business is inevitable to reinforce its competiveness in the global market.

In recent months, the stock price of the IT solutions firm nosedived to a record low of 142,500 won ($122) since its initial public offering in 2014.

Most of the Samsung SDS employees were granted employee stocks when the firm went public.

In a press release Tuesday, Samsung SDS said it is mulling the split-off of its logistics solutions business in order to establish a fast decision-making process and accelerate business execution.

The company said it notified its board of directors about the split-off plan in a meeting held on Tuesday morning.

The statement came after the company announced that it would split the business unit on Friday last week, which infuriated small investors.

The company had previously told investors that it has no such plan to divide its businesses.

The group of the small investors staged a protest in front of the company’s head office in Seoul on Tuesday afternoon.

The group warned the company that it would take legal action against Samsing SDS if it proceeds with the plan to split its businesses.

The individual investors argue that the split-off will only benefit the family owners of Samsung Group, who had tried to leverage Samsung SDS to tighten their grip on the conglomerate.

Samsung SDS used to be considered one of key group affiliates in streamlining the intricate web of cross-shareholdings of the conglomerate.

The restructuring of the affiliates is thought to be a prerequisite for Samsung heir apparent Lee Jae-yong to take the helm of Samsung Group.

The logistics solution business provides services to build a supply chain system for affiliates, for example, the one for Samsung Electronics’ smartphones or electronics in the global markets.

The logistics solution business, one of the three main pillars of Samsung SDS, along with the system integration business and IT services business, earned 2.3 trillion won in revenue last year, accounting for 33.2 percent of the entire sales of the company.

The SI business combines computing systems and software applications together into an interconnected system while the IT services business provides consulting services to revamp IT systems.

Samsung SDS said that it would make further efforts to beef up its other businesses, but it only fanned speculation that the two other businesses will also be split off and merged with other Samsung affiliates or a different company.

By Kim Young-won (wone0102@heraldcorp.com)