After founder’s death, Lotte’s next chapter begins

Home > Business > Industry

print dictionary print

After founder’s death, Lotte’s next chapter begins

테스트

The Lotte family, including Chairman Shin Dong-bin and his older brother Shin Dong-joo, a former Lotte Holdings vice chairman, at the funeral at Asan Medical Center in Songpa District, southern Seoul, on Sunday. [LOTTE CORPORATION]

Following the death of Lotte founder Shin Kyuk-ho Sunday, his son - Shin Dong-bin - is seen taking control of the business empire.

Listing Lotte Hotel is one of the possible maneuvers for consolidating his grip over the retail-focused group.

The Lotte founder held 3.1 percent of the shares of Lotte Corp., 1.3 percent of Lotte Chilsung Beverage and 4.48 percent of Lotte Confectionery.

Shin Kyuk-ho stepped down from management in 2015 after a succession battle between Shin Dong-bin and older brother Shin Dong-joo, a former vice chairman of Lotte Holdings in Japan. Dong-joo was ousted as Lotte Holdings vice chairman in late 2014 and was dismissed from board positions at Lotte subsidiaries.

Shin Dong-bin has been the CEO of Lotte Holdings since February last year. He was reappointed in June as its director, reaffirming his grip over Korea’s fifth-largest conglomerate.

“Management conflicts will not likely be repeated,” wrote analyst Jeong Dong-ik from KB Securities in a report Monday. “The key to controlling Lotte depends on who gets the support from shareholders of Japan units, but Chairman Shin Dong-bin was reappointed as the director of Lotte Holdings in Japan in June.”

To solidify the company structure, Lotte is expected to accelerate the listing of Lotte Hotel, which is controlled by Lotte Holdings.

Shin Kyuk-ho is known to have disliked listing affiliates, saying “Why sell the company to others?” Shin Dong-bin, on the other hand, is known to believe in the separation of ownership and management. He is also known to be aggressive in terms of mergers and acquisitions.

Lotte Hotel is important in that it has shares in the conglomerate’s key units in Korea, including Lotte E&C, Lotte Chemical and Lotte Aluminium.

So unless Lotte Hotel is listed and the ownership of Lotte Holdings reduced, the Japanese companies will maintain influence and the group will still be seen as a Japanese company.

Shin Dong-joo is the largest shareholder of Kojyunsya, the Japanese company which is the biggest shareholder of Lotte Holdings. It is better known as Gwangyunsa in Korea.

Lotte Hotel operates hotels, duty-free stores, golf courses, resorts and Lotte World Tower businesses.

It was set to be listed in 2015, but the offering was withdrawn the following year following a bribery scandal involving former president Park Geun-hye. Lotte Hotel was valued at 15 trillion won ($13 billion) at the time.

In 2017, its performance weakened as the number of Chinese tourists visiting dropped after the deployment of the U.S.-led Terminal High Altitude Area Defense (Thaad) battery in Korea. Lotte Hotel and duty-free properties were affected, as was Lotte’s businesses in China.

But Chinese visitor are now returning, and this is seen as helping the performance of Lotte Hotel.

The appointment of Lotte finance expert Lee Bong-chul as the head of the hotel and service business unit last month suggests the possibility of Lotte Hotel listing this year.

Shin Dong-bin and Shin Dong-joo met for the first time in over a year on Sunday. The last time was during Shin Dong-bin’s bribery in October 2018.

Shin Dong-bin arrived first in the morning, followed by Shin Dong-joo and his wife. They received mourners at the funeral held at Asan Medical Center in Songpa District, southern Seoul.

Other family members, including the founder’s wife Hatsuko Shigemitsu and partner Seo Mi-kyung, attended.

Samsung Electronics Vice Chairman Lee Jae-yong and CJ Group Chairman Sohn Kyung-shik also attended Monday. Political figures, including former National Assembly Speaker Kim Hyong-o, also attended to offer condolences.

Chairman Huh Chang-soo of the Federation of Korean Industries released a statement on Shin Kyuk-ho.

“Looking back, the chairman was like a mythical figure,” said Huh, who is also a GS Group honorary chairman. In the ’70s when there wasn’t enough food and entertainment, he led the development of food and tourism industries, saying people become happier when they experience better food and culture.”

BY JIN MIN-I [jin.minji@joongang.co.kr]

More in Industry

Luxury loungewear is no longer just for lounging

KGC to work on a ginseng-based vaccine adjuvant

Hanwha Techwin continues selling CCTV systems overseas

Popeyes to close all branches in Korea this month

Contract signed for Covid-19 vaccine

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now