Losing Lotte son will spend 1 trillion won on shareholders

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Losing Lotte son will spend 1 trillion won on shareholders

Shin Dong-joo, the older brother and loser in the battle for control of the Lotte Group last year, will give out his fortune to sway Lotte Holdings shareholders to his side in a renewed battle to oust his younger brother from the executive position at the Japan-based holding company.

The eldest son, head of Seoul-based SDJ Corporation, unveiled his plan in Tokyo on Friday while Min Yoo-sung, who serves as an advisor at SDJ, briefed Shin Dong-joo’s stance to reporters in Korea.

The move follows the older son’s announcement to call an extraordinary shareholder-meeting of Lotte Holdings to disapprove the leadership of his younger brother who has the title of Co-CEO at Lotte Holdings.

Shin Dong-joo said that he will use 1 trillion won ($811 million) as “welfare funds” for Lotte employees in Japan if members of workers’ association at Lotte Holdings, which collectively holds 27.8 percent or 1.2 million shares of the unlisted holding unit, agree to his agenda during the meeting.

The association consists of 130 workers who have worked for Japan’s Lotte operations for over 10 years.

He has suggested to the shareholders that they vote to take Lotte Holdings public, dismiss current board executives including Shin Dong-bin and bring him or founder Shin Kyuk-ho back to head the company.

In the process of going public, Dong-joo said that he will encourage the association members to sell their shares so that the 1.2 million shares will be distributed to up to 5,000 Lotte employees and retirees in Japan.

The elder son said that such a process is necessary to prepare for the possible initial public offering and make the structure of Lotte Holdings more transparent.

In return for offloading the shares, the association members will be able to receive up to 2.5 billion won, according to Min.

The decision by the workers’ association is important because it has a sizable amount of shares as the second largest shareholder.

The top shareholder is Kojyunsya, a small business specializing in packaging, with 28.1 percent shares of Lotte Holdings. Since Shin Dong-joo is the largest shareholder of Kojyunsya, the voting of the unit is almost surely on the side of the older son.

But it is unclear whether the workers’ association will favor Shin Dong-joo.

In the previous shareholder’s meeting last year, the association approved the leadership of Shin Dong-bin.

The shareholder meeting came after founder Shin Kyuk-ho was removed from an executive board member because of Shin Dong-joo’s coup against the chairman.

The elder son was also dismissed from his position as vice chairman of Lotte Holdings last year.

BY PARK EUN-JEE, LEE HYUN-TAEK [park.eunjee@joongang.co.kr]

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