Will LG Group Ownership System Change?

The restructuring of the entire LG Group is expected to be quickly completed shortly after Koo Kwang-mo's appointment as a registered director of LG Corp., the group's holding company.
The restructuring of the entire LG Group is expected to be quickly completed shortly after Koo Kwang-mo's appointment as a registered director of LG Corp., the group's holding company.

The inauguration ofthe LG Group's fourth-generation owner system is just one month away. In the Korean business world, there is a growing interest in the big picture the LG Group will create following the death of the late chairman Koo Bon-moo.

The attention is focused on Koo Kwang-mo, an executive director of LG Electronics and the only son of the late LG chairman who is expected to take over the group's helms.

Another man who draws keen attention is Koo Bon-joon, the late chairman's younger brother who controlled the group as vice chairman for more than one year on behalf of his ill elder brother, as he is expected to leave the group soon. 

According to Korean business circles on May 28, executive director Koo Kwang-mo is currently briefed on the state of the LG units while continuing to work at the Information Display (ID) Business Division of LG Electronics as usual.

Koo Kwang-mo will be appointed as a registered director of LG Corp., the group's holding company, at an extraordinary general meeting of shareholders on June 29.

The group will discuss the division of the group to let vice chairman Koo Bon-joon leave the group with some of the group’s affiliates in a BOD meeting. It is expected that after the discussion, the reorganization of the group will significantly accelerate.


“Vice chairman Koo Bon-joon will not play a part in the process of Koo Kwang-mo’s succession to the chairmanship of the group,” said an official of the Korean business world familiar with the LG Group. "It is expected that Koo Kwang-mo will be promoted to a vice president or higher. But it is too early to tell that Koo Kwang-mo will directly become the vice chairman or chairman of the group as many predictions are being made inside the group.”

"Basically, an extraordinary shareholders' meeting will appoint Koo Kwang-mo as head of the group and let vice chairman Koo Bon-joon spin off as quickly as possible. This is certain.”the official said.


However, some LG Group officials are predicting that vice chairman Koo Bon-joon will take and manage key LG Group affiliates including LG Display, which has market capitalization of more than seven trillion won and the LG Material & Production Technology Institute as a separate and independent business group. Vice chairman Koo has about one trillion won in LG Group shares so LG Innotek among other LG affiliates is one that the vice chairman can buy with his cash. Considering that LG Display is highly reliant on LG Electronics and is a core affiliate of the LG Group’s automotive electronics device business, it is expected that it will not be easy to spin off LG Display from the LG Group.

Some officials in the Korean business world expect that the restructuring of the entire LG Group will be quickly completed shortly after Koo Kwang-mo's appointment as a registered director. During this process,Koo Kwang-mo is expected to receive big support from Kwon Young-soo, vice chairman of LG U+, Cho Sung-jin,vice chairman of LG Electronics, Cha Seok-yong, vice chairman of LG Household and Health Care, Park Jin-soo, vice chairman of LG Chem, Han Sang-beom, vice chairman of LG Display and Ha Hyeon-hee, vice chairman of LG Corp.


In particular, it is also said thatas Koo Kwang-mo worked as an executive of the LG Synergy Team and the LGManagement Strategy Teamuntil he was transferred to LG Electronics this year, Koo Kwang-mo will begin to reorganize the business of the LG Group a great deal by succeeding the management philosophy of the late chairman Koo Bon-moo at the end of this year and early next year.

"If you see growth potential like that of automobile parts and the new energy field, you have to preempt the market by concentrate resources and making bold moves,” the late chairman Koo Bon-moo said, stressing securing future growth engines in his new year’s message for 2016, the last year he took care of the overall business of the LG Group.

"Once the new business schedule including the acquisition of Austrian automotive parts maker ZKW is completed, Koo Kwang-mo’s management style with strong executive power will be displayed, I think," said an official of an LG affiliate.

Some officials of Korea business circles are forecasting that if the business management system led by Koo Kwang-mo is stabilized, the system where the six vice chairmen play key roles in the group business will continue for the time being.

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