Trial to Change

Lotte Group has decided to accelerate the adoption of a holding company structure in the near future.
Lotte Group has decided to accelerate the adoption of a holding company structure in the near future.

 

The Lotte Group announced on January 19 that it decided to review the adoption of a holding company structure in the near future and it is considering various ways to that end. According to industry sources, the ways include the listing of Hotel Lotte, spin-off and the establishment of an intermediate financial holding company.

Actually, the groundwork has been done to some extent. Last year, the group and McKinsey & Company worked on how to carry out structural reorganization and the latter suggested the grouping of the former’s 90 or so subsidiaries into four business units. Details of the plan are to be made public late this month.

Then, its intermediate holding company is likely to hold the group’s subsidiaries under its control and their cross-shareholding can be eliminated as a result during the course. Its subsidiaries in the financial sectors, such as Lotte Card, are expected to gather under the intermediate financial holding company instead of belonging to any one of the four business units.

The listing within this year of Hotel Lotte, which is likely to function as the holding company, has yet to be determined though. According to the Korea Exchange, any company run by a representative director convicted of misappropriation or embezzlement cannot be listed for three years and Lotte Group chairman Shin Dong-bin is currently standing trial.

At present, multiple bills that make it difficult to adopt a holding company structure are expected to be enacted without delay after an early presidential election following the impeachment of President Park Geun-hye. Experts point out that Lotte’s quick conversion to a holding company is advantageous in this regard, that is, the minimization of political risks.

 

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