Hyosung to adopt holding company system
The move is expected to reduce some of the risk following a power struggle between the sons of Hyosung’s founder and recent charges against the group’s former Chairman Cho Suck-rai and strengthen the control of current Chairman Cho Hyun-joon over the group.
According to Hyosung on Wednesday, it is spinning off four companies ahead of shifting to a holding company structure. Under the new structure, the holding company Hyosung Corporation will focus on group-wide investment plans.
The four companies are textile and trading company Hyosung TNC, shipbuilding and construction unit Hyosung Heavy Industries, industrial materials unit Hyosung Advanced Materials and chemical business unit Hyosung Chemical.
Other subsidiaries under Hyosung operating at home and abroad will be placed under these corporations based on business relevance. Some will also be placed directly under the holding company.
The shift was predicted last year as the likely approach that Hyosung would take to improve management transparency and increase shareholder value.
“The shift to a holding company structure could enhance corporate value, as opaqueness in governance has been pulling down Hyosung’s share price,” said Lee Eung-ju, an analyst from Shinhan Investment. “Also, each business division under Hyosung earns a chance to be re-evaluated.”
According to Lee, Hyosung is the global No. 1 in the spandex and tire cords industries, however its global competitiveness has been underestimated as these areas were just a small part of the seven different business divisions under Hyosung.
Hyosung will finalize its decision on April 27 at the shareholders’ meeting. If the plan is approved, the spin-off will be completed by June 1.
BY KIM JEE-HEE [firstname.lastname@example.org]