Expensive Change
It is expected that at least 2.5 trillion won (US$2.1 billion) is required for the Lotte Group to get rid of its cross-shareholding structure while maintaining control of itself.
According to research firm CEO Score, most of the rings in the structure that covers 416 subsidiaries in total will be cut when the shares of the six subsidiaries which own shares in the three key affiliates of Lotte Shopping, Lotte Confectionery, and Lotte Chilsung Beverage are dealt with. Specifically, the six companies are Fujifilm Korea, Lotte Confectionery, Lotte Data Communication Company, Lotte Chilsung Beverage, Lotte Engineering & Construction, and Daehong Communications, and they are estimated to have shares worth 2.4599 trillion won (US$2.0947 billion) in the three key subsidiaries.
Five out of the six companies, including Fujifilm Korea, have shares worth 1.8325 trillion won (US$1.5603 billion) in Lotte Shopping. The equity values of Lotte Chilsung Beverage and Lotte Confectionery are 499.9 billion won (US$425.6 million) and 123.5 billion won (US$105.2 million), respectively. Lotte Confectionery is an owner of Lotte Chilsung Beverage, and Daehong Communications and Lotte Engineering & Construction are owners of Lotte Confectionery. The 172 rings of cross shareholding, including that which cover Lotte Confectionery, Lotte Chilsung Beverage, Lotte Food, and Daehong Communications will be severed when Daehong Communications’ Lotte Confectionery shares are bought by the largest shareholders or as treasury stocks.