Lotte may take Japanese unit public, group chairman says

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Lotte may take Japanese unit public, group chairman says

Lotte Group Chairman Shin Dong-bin is considering taking the company’s Japanese confectionery unit public to forge a corporate structure less affected by family wrangling.

“We may publicly list its [Japanese] subsidiary. After Hotel Lotte’s initial public offering in the first half of next year, we want to discuss a listing [for Lotte] as a future issue,” Shin Dong-bin is quoted as saying in the interview with Nikkei.

The Japanese confectionery maker is the key affiliate of Japan’s Lotte operations under de facto holding company Lotte Holdings.

The plan is the latest in a string of efforts to restructure management and tighten the chairman’s grip over Lotte’s Japan operations against older brother Shin Dong-joo. The older brother used to run the Japanese business but he was stripped of his vice chairman position at Lotte Holdings in January and started a fight against the younger brother afterwards.

The vanquished brother threatened to pull down Dong-bin’s leadership at Lotte Holdings and opposed his plan to list Hotel Lotte using his holdings in privately-held Lotte affiliates.

If the Lotte units are publically-traded, it will be harder for Shin Dong-joo to execute any legitimate influence over management. Instead, the decision-making power will go to Chairman Shin, shareholders and board members, most of whom stand with the younger brother.

“The company and family are separate. Company problems have to be settled through a general shareholders meeting or by the board of directors,” he said in the interview.

Shin’s move to list Japan’s Lotte coincides with the company’s decision to buy 259.4 billion won ($220 million) worth of shares or 7.9 percent stake in Korea’s Lotte Confectionery.

Korea’s Lotte Confectionery, which is a public company, made the announcement in a regulatory filing, saying the purchase is aimed at furthering cooperation between the two units and creating synergies.

The purchase follows Japan Lotte’s decision to buy a 2.1 percent stake in Lotte Confectionery earlier this week.

The deals between the Lotte affiliates are meant to put Shin Dong-joo, who has some 22 percent shares in the confectionery unit, on edge.

The Lotte head also expected further consolidations among the two groups with the same business portfolio.

“As confectionery makers, the Japanese and Korean companies rank 17th and 18th in the world in terms of sales, but if they became a single group, it would be around seventh, making it a presence that can compete globally,” the chairman said in the interview. “We have 120 employees in Japan and 300 in Korea handling research and development in confectionery and food. Eliminating redundancies in research would create more synergy.”

Regardless of the plans, Shin Dong-joo continues his efforts against the chairman and has filed lawsuits in Japan and Korea.

As the fight drags on, the chairman carries out business restructuring through mergers and acquisitions, including the acquisition of Samsung’s chemical units to Lotte Chemical.


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