Against Merger
A group of individual shareholders in Lotte Group recently filed a petition opposing the group’s merger plan of four affiliates. In this regard, Lotte Group said on August 14, “We pledged the people to introduce the holding company system through a merger.”
On August 11, the group composed of minority shareholders filed a petition with the government’s National Pension Service opposing the merger with Lotte Confectionery, Lotte Chilsung Beverage Lotte Foods and Lotte Shopping.
The group is raising four questions including the calculation of Lotte Shopping’s merger ratio, Chairman Shin Dong-bin’s involvement in the country’s biggest political scandal called “Park Geun-hye/Choi Soon-sil Gate,” gap between the estimated value of merger ratio and the price of purchase claim and Lotte Group’s systematic crackdown on minority shareholders.
Lee Seong-ho, the leader of the minority shareholder’s group, said, “Lotte Group’s ongoing plan regarding the four companies is not for the sake of shareholders but part of the group’s scheme to share Lotte Shopping’s high business risk with shareholders of the other three. It is also part of its gimmick to strengthen certain shareholders’ control of the group by establishing the holding company. It is an unfair business misconduct demanding sacrifice and damage of minority shareholders."
Lotte Shopping has posted an operating loss of 3 trillion won (US$2.63 billion) in China. In addition, huge losses this year, potentially insolvent real estate projects, including Shenyang in China, risk of future retail business from the Chinese government’s retaliation over the deployment of the U.S. Terminal High Altitude Area Defense (THAAD) system have not been reflected into when calculating the ratio of merger, according to the group.
Regarding this, Lotte Group said, “The four companies including Lotte Confectionery were properly evaluated in accordance with the related laws. We are seeking to merge the companies in order to get rid of cross shareholding by strengthening transparency of the governance structure and improve the corporate value by raising the business efficiency through the separation of investment and business.”
The group also added, “The merger process is going smoothly according to related laws and regulations. We will make an every effort to make the corporate value and shareholder value grow together.”