Taekwang sues to block Lotte Shopping’s control of Woori

The conflict between Taekwang Industrial and Lotte Shopping over Woori Homeshopping took a nasty turn yesterday, as Taekwang filed for a court ruling to force Lotte to give up its majority stake in the TV network.
Taekwang is the second-largest shareholder of Woori with a 45-percent stake. Lotte bought 53 percent of Woori in August, beating Taekwang to become majority shareholder.
“The Korean Broadcasting Commission’s approval [of the sale to Lotte] did not abide by the appropriate procedures and was against the evaluation criteria,” Taekwang claimed in the filing. “The commission should block Lotte from practicing voting rights [in Woori], and order Lotte to sell off its Woori shares within six months.”
Taekwang executives argued that Lotte had been turned down already when it tried to become operator of Woori in 2001, and that it violated the law when, three years later, Lotte indirectly acquired the network by purchasing Woori shares held by Kyungbang, Ltd.
The approval procedure for a share purchase is different from that for becoming a network operator. But the commission gave Lotte approval, based on that procedure, asserted Taekwang in its filing paper. The Taekwang filing argues that, by acquiring a majority of Woori shares from Kyungbang, Lotte became the de facto operator.
“Taekwang’s claims are not right and it’s only what they think,” said a Lotte executive who declined to be identified. “Lotte will treat Taekwang as a legitimate No. 2 shareholder. We want to cooperate. It is time to work together for the same goal.”
Owners of the firms locked in the dispute are linked by marriage, though in a rather convoluted fashion. The chairman of Taekwang, Lee Ho-jin, is married to the daughter of Lotte Chairman Shin Kyuk-ho’s younger brother.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]