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Tag: lotte holdings

  • Lotte Japan votes to keep imprisoned Shin on board

    Lotte Japan votes to keep imprisoned Shin on board

    Shareholders of Lotte’s Japanese holding company voted to retain imprisoned Lotte Group Chairman Shin Dong-bin as director, dashing his estranged older brother Shin Dong-joo’s hopes to take over the position.

    At the meeting held at Lotte Holdings’ headquarters in Tokyo, shareholders voted against ousting Shin Dong-bin from the board and replacing him with his older brother. Shin Dong-joo has been trying to overthrow his brother since all of his titles, including vice chairman of Lotte Japan, were stripped from him in 2015. This was his fifth unsuccessful attempt to win over Lotte Holdings’ shareholders.

    His younger brother Shin Dong-bin, who has been in jail since February on charges of bribery related to President Park Geun-hye’s abuse of power scandal, requested bail earlier this month in order to make his case to the shareholders in the latest meeting. However, his request went unanswered until late Thursday. A team of Lotte Group executives in Korea, including Vice Chairman Hwang Gak-gyu, had to deliver Shin’s letter to Lotte Holdings’ top management.

    “We’re relieved that the shareholders of Lotte’s Japanese unit expressed their support for Chairman Shin despite his vacancy,” said Lotte Corporation, Lotte’s Korean holding company, in a statement issued immediately after the results came out.

    The statement also condemned Shin Dong-joo. It requested that he “stop evoking needless controversies that create an uneasy sentiment among [Lotte] employees and degrade the company’s value.”

    Shin Dong-joo issued a statement through his SDJ Corporation that the older Shin will “continue pushing efforts to normalize Lotte Group,” implying that he may continue to campaign to take over his younger brother’s position at the retail conglomerate.

    A few days after his imprisonment, Shin resigned as co-CEO of Lotte Holdings. The chairman’s detainment raised concerns at the group’s Korean unit, as Shin Dong-joo reignited his efforts to regain control over Lotte.

    Friday’s vote, however, indicates that Lotte’s Japanese unit still has faith in Shin Dong-bin’s leadership, despite a tendency for Japanese shareholders to be harsher on top brass accused of bribery charges.

    Lotte Holdings and its other Japanese affiliates currently own a large stake in the group’s core Korean businesses, like Hotel Lotte and Lotte Property & Development. Their approval is crucial for Lotte Group’s Korean affiliates’ plan to reduce the stakes that Japanese affiliates hold in them.

    “The restructuring is not a one-shot deal – we’re doing what we can, like acquiring shares little by little,” said a Lotte Group spokesman.

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  • Lotte chief unseated from group’s virtual holding firm

    Lotte chief unseated from group’s virtual holding firm

    In a hastily arranged shareholder meeting in Japan, Lotte Group Chairman Shin Dong-bin lost his seat on the board of Kojunsha, which is at the apex of the group’s entire governance structure, with a 28 percent stake in Lotte Holdings, the group’s holding firm, according to his elder brother Shin Dong-joo, who owns a 50 percent stake in the Japanese package manufacturing firm.

    The group’s business spans from luxury hotels to amusement parks, mostly located in South Korea and Japan.

    Dong-bin has a 38.8 percent stake in Kojunsha, and their father and group founder Shin Kyuck-ho owns 0.8 percent.

    But Lotte Group said earlier even if its chairman were to be removed from Kojunsha’s board, it would have little impact on the group management.

    Lotte Holdings is 28 percent owned by employees, 20 percent by affiliates and 11 percent by special investment vehicles.

    Lotte, a retail giant, has been mired in the family squabble involving the founder and his two sons, who are sparring to bolster their grip on the group.

    In August, Dong-bin bagged a landslide win at a shareholders meeting for Lotte Holdings, in what was thought to be the end of the family squabble.

    Last week, Dong-joo said he will lodge suits against his younger brother to regain the helm of the group.

     

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  • Lotte chief vows to improve corporate governance

    Lotte chief vows to improve corporate governance

    By Kim Eun-jung

    SEOUL, Sept. 17 (Yonhap) — The chief of South Korean retail giant Lotte Group pledged Thursday to untangle a cobweb of cross-shareholding among its affiliates and speed up the listing process of its hotel unit.

    Testifying before a parliamentary committee, Shin Dong-bin also ruled out the possibility that Lotte, the fifth-largest family-run conglomerate in South Korea, may be embroiled in another family fight over leadership.

    Shin appeared before a parliamentary audit of the antitrust watchdog the Fair Trade Commission, tasked with assuaging public discontent after a bitter fraternal feud over winning control of the nation’s fifth-largest conglomerate.

    After winning the backing of Japanese shareholders last month, the 60-year-old has vowed to improve corporate transparency and list Hotel Lotte, a hotel and duty-free operator.

    During the nationally-televised audit session, Shin apologized for the family feud and vowed to clean up 80 percent of the cross-shareholding structure by the end of October.

    “We formed a task force to improve the governance structure and restore the brand image,” Shin said.

    Lotte has listed only eight companies and the core units are linked through unlisted Japanese units. Shareholders of the small Japanese firms remain largely shrouded in darkness because they are not subject to Korea’s financial disclosure rule.

    As part of reform efforts, Shin bought 35.8 billion won in Lotte Confectionery Co. shares from Lotte Construction on Aug. 28, clearing up about 34 percent of the cross-shareholding links.

    Shin said the task force is working on the initial public offering for Hotel Lotte, with plans to complete it by the first half of next year. Last week, Lotte selected three lead managers for the planned initial public offering.

    Hotel Lotte is 99 percent controlled by Japanese shareholders, including Tokyo-based Lotte Holdings and other unlisted Japanese companies.

    Lotte said earlier the hotel unit is expected to have a market capitalization of around 10 trillion won ($8.5 billion) when it lists, but market watchers estimate it could reach as much as 20 trillion won, considering its large stakes in affiliates and strong earnings.

    When repeatedly asked about the company’s identity, Shin said Lotte is a Korean company that generates most of its sales locally.

    “Lotte is a Korean company because it pays tax according to the Korean law and its employees are Koreans,” Shin said, noting he will maintain the Korean nationality.

    Founder Kyuk-ho was born in the South Korean port city of Ulsan, 414 kilometers south of Seoul, while his sons were born and raised in Japan by a Japanese mother.

    Lotte has tried to allay public discontent over its historic links to Japan as it could deal a harsh blow to the group that heavily relies on the retail, food and travel industries.

    Lotte was first established as a confectionery store in postwar Japan in 1948. It later expanded into Korea when diplomatic ties between Japan and Korea were normalized following Japan’s colonial rule from 1910 to 1945.

    Although lawmakers’ summoning businessmen has been a longstanding ritual as a way to flex their muscles in front of cameras, it is the first time the head of one of the nation’s top 10 family-run conglomerates, called chaebol, showed up before parliament to face acrimonious questions.

    Shin was called in for a 2013 parliamentary audit, but he evaded it, citing overseas trips and instead paid fines. But this time, negative public sentiment and growing government pressure left him no choice but to clarify issues related to the governance structure and other related issues.

     

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  • Lotte Group Founder Loses Japan CEO Title Amid Succession Battle

    Lotte Group Founder Loses Japan CEO Title Amid Succession Battle

    Turmoil has erupted atop South Korea’s largest retail giant Lotte Group, shining a spotlight on one of the biggest family feuds the country has seen.

    The week began with 92-year-old Lotte founder Shin Kyuk Ho and his eldest son flying to Japan to fire a group of senior managers at a key unit, a maneuver that backfired and left the patriarch sidelined the next day. By Wednesday, Shin Dong Bin had successfully fended off his elder brother’s attempt to derail him from taking over control of the group.

    At stake is leadership over a conglomerate with 80 units across Korea, operating everything from department stores, amusements parks to hotels with 112 trillion won ($97 billion) of assets. Though the country saw sibling rivalries tear up Hyundai Group more than a decade ago, power struggles at businesses of Lotte’s size are rarely displayed in public in a corporate landscape dominated by family-run businesses, known locally as the chaebol.

    “It was an unexpected move as everyone had assumed that the founder had already selected Shin Dong Bin as his heir,” said Chae Yi Bai, an analyst at corporate watchdog Center for Good Corporate Governance. “This puts Lotte’s succession plans back in debate.”

    The drama at Lotte Group comes at a time when concerns over dynastic succession is fresh in people’s memories. Less than two weeks ago, Samsung Group narrowly defeated billionaire activist investor Paul Elliott Singer in a hotly-contested proxy fight, paving the way for the founding Lee family to tighten its grip over the nation’s largest conglomerate.

    Back at Lotte, co-chairman Shin Dong Bin apologized to employees on Wednesday for the turmoil brought by the dispute and urged them to put faith in him.

    “I am very sorry for causing uncertainties and turmoil to you all — the corporate value that Lotte has held up for a long time should not be rattled simply by an individual’s family issues,” 60-year-old Shin said in a note to employees, a copy of which was distributed to the media.

    The founder’s act to support elder son Shin Dong Joo, 61, had been unexpected as the younger Shin had been heir-apparent after executive titles including the vice chairman role at the parent group were stripped from Dong Joo in January.

    Lotte declined to make Shin Kyuk Ho or Shin Dong Joo available for comment.

    Shares Spike

    Shares of Lotte’s listed South Korea affiliates spiked on speculation the contesting Shin brothers would snap up the shares to solidify their control, Kim Tae Hong, an analyst at Yuanta Securities Korea Co. said by phone.

    Lotte Shopping Co. rose for a second straight session to end 6.6 percent higher by the close of trading in Seoul, the largest gain since 2010. Lotte Confectionery Co. closed up 4.7 percent, after jumping as much as 16 percent. The benchmark Kospi index ended little changed.

    In an earlier statement sent to media Wednesday, Lotte Group said the older son and his father’s July 27 act to fire executives at the closely held Japan unit Lotte Holdings Co. didn’t follow legal procedures.

    Tokyo-based Lotte Holdings’ board of directors held a meeting a day after to nullify the dismissals, and decided to move the founder into an honorary chairman role, according to the statement. Such a role typically carries no specific duties or voting rights.

    The older Shin brother’s attempt to gain influence over the Japan unit is aimed ultimately at capturing control over the entire group, due to the conglomerate’s shareholding structure, according to Chae.

    Attack Blocked

    “Whoever holds Lotte’s holding companies in Japan pretty much holds the entire group because of how the group’s corporate governance structure is designed,” Chae said. “It’s too early to say who won the crown, but Shin Dong Bin seems to have successfully blocked the attack this time around.”

    The founder holds a 28 percent stake in Lotte Holdings Co., Dong Joo holds 20 percent and Dong Bin has 19.1 percent, while a company called Kwang Yoon Sa holds 27.65 percent, according to data compiled by Bloomberg. Kwang Yoon Sa, a packaging company also based in Tokyo, is said to be owned by the founder, according to the Korea Economic Daily.

    Lotte Holdings spokeswoman Ruka Mizuno declined to comment on the governance structure of Lotte Holdings and Kwang Yoon Sa. when reached by phone, saying the companies aren’t listed.

    Shin Kyuk Ho, born in Ulsan, South Korea in 1922, started Lotte in Japan in 1948 after completing his university studies there. The company started off selling chewing gum in postwar Japan and quickly grew into a major confectionery company.

    When diplomatic relations normalized between Korea and Japan in 1965, Shin began investing in his home country and established Lotte Confectionery Co. in 1967, according to the Seoul-based Center for Good Corporate Governance.

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  • Shin calls for fresh goals for entire Lotte group

    Shin calls for fresh goals for entire Lotte group

    The 60-year-old chairman on Thursday became chairman of Lotte Holdings, the holding company of the Lotte Group in Japan, which was previously held by his brother Shin Dong-joo. This sealed his control of Lotte operations in both Korea and Japan. It is believed to be the first step in uniting the businesses in both countries.

    According to industry sources, Hwang Gak-kyu, president of policy coordination at Lotte Group, is already making adjustments to the chairman’s Vision 2018.

    In 2009, Shin teamed up with the Boston Consulting Group to devise long-term goals for the Korean retail giant to expand into a conglomerate that would be 10th-largest in Asia with annual revenues of 200 trillion won ($173 billion).

    “It seems that Chairman Shin has come to the conclusion that the vision needs to be readjusted, as the leadership has changed and the retail industry is also changing rapidly,” said a high ranking official at Lotte.

    Lotte Japan has far smaller revenues than Lotte Korea. In 2013, Lotte Korea generated 83 trillion won in revenue from 74 affiliates. On the contrary, the Japanese businesses only generated 5.7 trillion won in revenue from 37 affiliates.

    The biggest change in the vision is said to be “select and focus” and “synergy management.”

    Lotte said it is looking into the idea of choosing duty free shopping, hotels, chemicals and finance as core businesses and focus its resources on enhancing those businesses. Additionally, since food and beverages are key businesses in Lotte Japan, it plans to generate synergy with Lotte Shopping and Lotte Confectionery.

    For new growth engines, the retail conglomerate is likely to inject large amounts of investment, but the affiliates that are not picked will likely undergo heavy restructuring, and some will probably shut down.

    One of the key areas for Lotte is chemicals.

    On Friday, the day after Shin was officially made the head of Lotte Japan, he visited Lotte Chemical’s headquarters in Sindaebang-dong, southwestern Seoul, where he was briefed on business.

    On the contrary, investments in department stores and supermarkets is expected to decline. Lotte Group is expected to pursue merger and acquisitions in channels that combine offline and online shopping in order to raise synergy with existing branches and businesses.

    “Considering the size of changes that Lotte will undergo, we can’t say the funding we have is sufficient,” a Lotte official said. “Our investments will likely focus on quality more than on quantity.”