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Ownership restructuring

LG to hive off trading, four other units into new group

Nov 26, 2020 (Gmt+09:00)

South Korea’s fourth-largest conglomerate LG Group will split off its trading arm LG International Corp. and four other non-core units into a new business group to be controlled by the group chairman’s uncle Koo Bon-joon.

The group’s holding firm LG Corp. approved the spin-off of the five units – LG International, LG Hausys Co., Silicon Works Co., Pantos Logistics Co. and LG MMA Corp. – at a board meeting on Nov. 26. The plan will be finalized at a general shareholder meeting set for next March.

Koo, the third son of the late Honorary Chairman Koo Ja-kyung, is the second-largest shareholder in LG Corp. with a 7.72% stake worth around 1 trillion won ($904 million).

In turn, LG Corp. is the largest shareholder in four LG units – International, Hausys, Silicon Works and Pantos Logistics.

The ex-vice chairman and senior advisor of the conglomerate is expected to sell his shares in LG Corp. and use the proceeds to buy shares in the four units. Separately, Pantos Logistics is owned by LG International.

Hausys is a construction materials company, and Silicon Works designs system semiconductors such as display driver ICs. LG MMA is a chemical firm.

The five companies to be separated from LG Group have 7 trillion won ($6.3 billion) in assets.

An LG Corp. source said the ownership restructuring will be conducted in a way to minimize its market impact.

The carve-out will mark the group's first such move in 15 years since it separated its construction, energy and retail businesses into the GS Group in 2005.

LG Group's 75 units had a combined 130 trillion won in net assets as of 2019.

Write to Hyung-suk Song and Dong-hui Park at click@hankyung.com

Yeonhee Kim edited this article.

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