Kakao and Celltrion Became Large Corporations

Kakao and Celltrion have been designated as business groups (large businesses) subject to cross-shareholding restrictions along with Harim, SH Corporation, Korea Investment Holdings and Kumho Petrochemical.

According to the Fair Trade Act, the business groups cannot be engaged in mutual investment, new recurring investment and debt guarantee. In addition, the voting rights on the shares of subsidiaries owned by affiliated banking and insurance firms are limited.

The Fair Trade Commission announced on April 3 that it included 65 business groups into the category, each of them having an asset of at least five trillion won as of April 1. Homeplus and Daesung were excluded from the group at this time and the number of the groups in that category increased from 61 to 65 between last year and this year. The number of those in the private sector rose from 49 to 52 while that of those in the public sector increased by one to 13 as SH Corporation swelled the ranks.

Kakao joined the ranks in its 10th year in the market after a series of mergers and acquisitions. Kakao’s asset skyrocketed from 217.2 billion won to 2.768 trillion won in October 2014, when it merged itself with Daum Communications. Its total asset amounted to 3.19 trillion won as of the end of last year. Biopharmaceutical company Celltrion’s asset reached 5.855 trillion won in its 14th year in the industry.

Harim, a chicken meat processing company, increased its asset from 4.7 trillion won to 9.9 trillion won last year by acquiring former STX Pan Ocean at a price of 4.2 trillion won. Korea Investment Holdings, whose asset is at around 8.33 trillion won, was excluded from the group of financial companies after it took over non-banking firms such as Dream Line and SeAH ICT. Kumho Petrochemical (5.14 trillion won) was spun off from the Kumho Asiana Group and SH Corporation (23.665 trillion won) joined the ranks after setting up its first subsidiary.

The total number of the business groups’ subsidiaries went up by 40 to 1,736 while the average number decreased 1.1 to 26.7 from a year ago. The total asset of the business groups is 2,337.6 trillion won, 79.2 trillion won more than a year earlier. The average asset fell one trillion won to 36 trillion won.