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Succession War Has Just Begun in Lotte Group
Modern Monarchy
Succession War Has Just Begun in Lotte Group
  • By Cho Jin-young
  • July 30, 2015, 02:30
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Lotte founder and General Chairman Shin Kyuk-ho arrives at Gimpo International Airport on night on July 28.
Lotte founder and General Chairman Shin Kyuk-ho arrives at Gimpo International Airport on night on July 28.


The succession wars at the Lotte Group have just started. Shin Dong-bin, the second son of the founder Shin Kyuk-ho, has apparently gained control of the Lotte Group and Lotte Holdings in both Korea and Japan by fending off the latest coup attempt by his elder brother Shin Dong-joo. But it still remains to be seen who will eventually reign over the 90 trillion won (US$77 billion) business empire.

The expectation gains strength because the two brothers own a neck-and-neck amount of shares of Lotte’s major affiliates such as Lotte Shopping, Lotte Chilsung, and Lotte Confectionary. The elder brother is known to fall slightly behind his younger brother Dong-bin in Korea, but outnumber him in Japan. Two brothers are also said to hold a similar amount of shares in Lotte Holdings in Japan, the de facto control tower of the business group’s governance in both countries. This means that Shin Dong-joo could trigger another war against his younger brother to win back the control of the group.

Even though the second son and his followers have successfully repressed the attempt to oust them by the first son in Japan, the final decision of senior Shin, who holds a substantial amount of shares in Lotte, is expected to serve as a swing vote in the final inheritance battle between the two sons.

Actually, the battle between brothers in the Lotte Group is a total surprise to the industry, since the senior Shin was thought to have had complete control over his sons with his charisma and money.

The senior Shin holds a 28 percent stake in Lotte Holdings, which has a 19.1 percent stake in Lotte Hotel, the de facto holding company of the Lotte Group in Korea. Lotte Hotel holds an 8.8 percent share in Lotte Shopping, and considerable stakes in other key affiliates. In particular, he is known to own 50 percent of Kojyunsya, a Japan-based packing company, which holds a 27.7 percent stake in Lotte Holdings, while his sons are reportedly powerless there.

The senior Shin founded Lotte in Japan in 1948 as a snack maker. The company entered Korea in 1967 and has grown to be the country's fifth-largest conglomerate, operating affiliates in a wide range of industries such as retail, hotel, and petrochemicals.

The group as a whole posted sales of about 90 trillion won (US$77 billion) in 2014, aiming to increase the figure to 200 trillion won (US$171 billion) by 2018. The Lotte Group in Korea earned more than 84 trillion won (US$72 billion) in sales, while its sister affiliates in Japan earned less than 6 trillion won (US$5.1 billion).