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Ownership restructuring

LG Group ex-chair eyes spin-off of trading, logistics units

Nov 16, 2020 (Gmt+09:00)

LG Group’s ex-Vice Chairman and senior advisor Koo Bon-joon is in talks to take the trading arm LG International Corp. and other non-core units under his wing, after splitting them off from the South Korean conglomerate, according to sources with knowledge of the matter on Nov. 16.

Koo, the third son of the late Honorary Chairman Koo Ja-kyung, is the second-largest shareholder in the group’s holding firm LG Corp. with a 7.72% stake worth around 1 trillion won ($903 million).

LG Corp. is the largest shareholder in three LG units – LG International, LG Hausys Co. and Pantos Logistics Co – which the ex-vice chairman is seeking to carve out from the parent group.

Koo is likely to sell the stake in LG Corp. to buy shares in the three units and then bring them under his control, the sources said.
LG Group senior advisor and ex-Vice Chairman Koo Bon-joon

In detail, the holding company LG Corp. has a 25% stake in International and a 34% stake in Hausys Co. a construction materials company, as well as 51% in Pantos Logistics.

Additionally, market talk is that Koo may take two other units – Silicon Works Co., which designs system semiconductors such as display driver ICs. and chemical firm LG MMA Corp. – with him. LG Corp. controls 33% of Silicon Works as its largest shareholder.

Koo had spearheaded business strategies of key units, LG Electronics Inc. and LG Chem Ltd., until he stepped down from the position after his eldest brother and then-group Chairman Koo Bon-moo passed away in 2018.

Since Koo Kwang-mo, son of Koo Bon-Moo, took over the group chairmanship in mid-2018, market speculation grew that the ex-vice chairman would separate part of the group’s operations into a new entity under his leadership.

LITTLE IMPACT SEEN ON CURRENT CHAIRMANSHIP

The possible spin-off led by LG International will likely have little impact on the current business structure under the leadership of Koo Kwang-mo, the group’s fourth-generation chairman.

LG Group has been hiving off non-core businesses from management's second generation.Its second generation spun off non-life insurance, fashion brand and retail and food businesses into separate entities. The third generation split off metal, cable and four other companies into a small group led by the second son of the group’s second chairman, Honorary Chairman Koo Ja-kyung, who passed away last year.

In 2004, the grandchildren of the group’s co-founder family hived off the petrochemical, retail and construction businesses to set up GS Group.

“We are considering various measures to improve our corporate value, but nothing has been determined,” LG Group said.

Write to Jun-ho Cha at chacha@hankyung.com

Yeonhee Kim edited this article.

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