Dongwon Industries becomes new holding firm of seafood conglomerate

Dongwon Group, South Korea’s leading seafood and logistics conglomerate, will undergo corporate restructuring with Dongwon Industries Co. emerging as its new holding company.

The group on Thursday submitted to the Korea Exchange a request to absorb unlisted Dongwon Enterprise Co., the current de facto holding company of the group, into Kospi-listed Dongwon Industries.

The group estimated the share price of Dongwon Enterprise to be 191,130 won and that of Dongwon Industries at 248,961 won as the basis for the merger of the two companies.

The trading of Dongwon Industries shares was suspended following the announcement on Thursday until April 11. The stock finished up 1.5% at 265,000 won on Thursday.

“The merger is aimed at streamlining our group’s governance structure, which will allow us to make quick decisions on our M&A activities and better respond to external business conditions,” said a group official.

Dongwon first became a holding company structure group in 2001 with Enterprise at its center. And now Dongwon Industries replaces Enterprise as the holding company of the group.

STREAMLINING

Dongwon Group founder and honorary Chairman Kim Jae-chul currently owns 24.5% of Dongwon Enterprise, while his second son Kim Nam-jung, vice chairman and de facto leader of the group, holds a 68.27% stake in the holding company.

Under the current structure, five companies, including Dongwon F&B Co., Dongwon Systems Corp., Dongwon Construction Industries Co. and Dongwon Industries, are placed under Dongwon Enterprise as its subsidiaries. Separately, Dongwon Industries has StarKist and Dongwon LOEX Co., formerly Dongbu Express, under its wing.

When the proposed restructuring is completed, all the subsidiaries will be placed under Dongwon Industries, the new holding company.

“Vice Chairman Kim has actively pursued M&As in Korea and abroad, including Doosan TechPack, Dongbu Express and Vietnam’s Tan Tien Packaging. Under the streamlined structure, Dongwon can accelerate its M&A bids and make funding much easier,” said an investment banking industry official.

FROM CANNED TUNA MAKER TO F&B GIANT

For many Koreans, particularly those in the older generations, the widely known Dongwon name has long been associated with canned tuna.

But the group’s de facto leader Kim Nam-jung has said he wants the firm to be remembered not just as a canned tuna maker but also as a food and beverage giant.

In September of last year, Dongwon F&B, the country’s largest producer of canned tuna, said it is strengthening its meat processing and distribution business by entering the business-to-consumer (B2C) sector.

The company has already acquired a couple of local food processing companies as part of its ambitious expansion plans. 

SHARE SPLIT

Industry watchers said the merger of Dongwon Enterprise and Dongwon Industries is expected to boost the corporate values of each.

Dongwon Industries plans to conduct a five-to-one share split to make the stock more widely available for retail investors. Under the plan, the face value of a Dongwon Industries stock will change from 5,000 won to 1,000 won.

Taking into account the share split, the merger ratio of Dongwon Industries and Dongwon Enterprise will be 1 to 3.84.

After the merger, Park Moon-su, Dongwon Enterprise's chief executive, will take charge of Dongwon Industries, the new holding company, while current Dongwon Industries CEO Lee Myung-woo will run the holding firm’s business operations.

In 2021, Dongwon Enterprise, with 6.69 trillion won ($5.46 billion) in total assets, posted 508.7 billion won in consolidated operating profit on sales of 7.6 trillion won.

With 3.05 trillion won in assets, Dongwon Industries posted an operating profit of 260.7 billion won on revenue of 2.8 trillion won last year.

Write to Soo-Jung Ha at agatha77@hankyung.com
In-Soo Nam edited this article.