[THE INVESTOR] Lotte Group Chairman Shin Dong-bin is poised firm his grip on his family’s conglomerate, following decision of the group’s four major units on April 26 to merge their investment entities into a central holding company.
According to industry analysts, the Shin family is expected to acquire nearly 50 percent of the shares of the newly created holding company. Shin himself will hold 10.56 percent of the shares in the holding company, as his existing stakes in the four Lotte units are converted into stakes in the new entity, according to analyst Chung Dae-ro of Mirae Asset Daewoo Securities.
“The (Shin) family could gain additional shares in the holding company by taking part in the takeover bids, in-kind contributions and distribution of new shares that will be conducted by the Lotte holding company,” Chung said.
On April 26, four major Lotte companies -- Lotte Confectionery, Lotte Shopping, Lotte Chilsung Beverage and Lotte Food -- held executive board meetings to vote on the governance shakeup. The four units each voted to split into business and investment entities, then to combine the investment entities into a single holding company under Lotte Confectionery.
The reshuffle will be put to a vote by shareholders at an Aug. 29 meeting. If it passes, it will go into effect in October.
The decision also reduced the number of cross-shareholdings between the companies from 67 to 18, making Shin’s control over the holding company more concrete.
According to Lotte Group, these changes are a demonstration of the group’s determination to follow through on Shin’s promises of more transparent and effective governance.
Lotte’s move is also being interpreted as an effort to remove the stigma of Japanese control that has plagued the group.
Since the breakout of a nasty and public family feud over corporate leadership in 2015, Lotte Group has come under fire from domestic consumers over the fact that Hotel Lotte, the de facto holding company of Lotte’s Korean companies, was mostly controlled by Japanese entities.
After the governance restructuring, the next goal for Shin will be to push through the public listing of Hotel Lotte. Although the group’s intent to list Hotel Lotte was made public in 2015, it has been continuously pushed back due to family infighting and prosecutors’ investigations into mismanagement by the leading family.
Shin is currently on trial to determine whether he ordered contributions to foundations run by Choi Soon-sil, the secret confidante of ousted former president Park Geun-hye.
By Won Ho-jung/The Korea Herald (firstname.lastname@example.org)