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Biz News Korea(Eng)

Lotte embarks on transition to holding structure

Collected: 2017.08.30

Distributed: 2017.08.31

Source: Go Direct

South Korea’s fifth-largest conglomerate Lotte Group embarked on the process to transform into a holding structure overseeing business entities as part of its promise to enhance management transparency.

Four Lotte key units - Lotte Shopping Co., Lotte Chilsung Beverage Co., Lotte Confectionery Co. and Lotte Food Co. - held separate shareholder’s meetings to proceed with the reorganization.

Under the restructuring scheme, the four listed firms would split into investment and business entities and then be merged under a single holding company centered on Lotte Confectionary.

The new holding structure is expected to be launched by early October, with the holding entity in charge of evaluating performance of each business unit, providing operational support and managing brand licenses.

The restructuring would ease Lotte’s notoriously complicated cross-shareholding web, boost transparency and bring in more value to shareholders, the group said. Lotte’s cross-affiliate associations, which reached as many as 416 in 2015, have been simplified to 67 by July. The reorganization will further rationalize the cross-affiliate network to 18.

The simplified structure would also help cement Chairman Shin Dong-bin’s control over the conglomerate’s operation in Korea.

Shin will emerge as the major shareholder of the holding entity through a stock swap. His stake in the holding firm is estimated to be around 10 to 20 percent but could be upped to 50 percent when adding up all shares that are in his favor.

By Sohn Il-seon

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