A Lotte Group scion has chose to sell a large portion of his stakes to main affiliates of the South Korean group as an expression of his disapproval to the retail giant's plan of establishing a holding company.
Representative of Shin Dong-joo, Lotte Group founder's eldest son and former vice-chairman of the Tokyo-based conglomerate Lotte Holdings said on Tuesday that he will be selling most of his shares to four units, including Lotte Shopping, Lotte Chilsung Beverage, Lotte Food, and Lotte Confectionary.
Lotte has been facing difficulty with restructuring its complicated structure and improving control after a public dispute in 2015 between founding family members, specifically the company's chief executive Shin Dong-bin and his elder brother Shin Dong-joo.
"The splits and mergers aimed at launching a Lotte holding company would not benefit individual shareholders", Shin Dong-joo's statement said.
While there was speculation that the move may signal the end of the battle between the two sons of Lotte founder Shin Kyuk-ho, SDJ ruled that out in Tuesday's statement, saying that the sell-off of Lotte shares "is an independent matter from management-related issues", and that it does not mean the older Shin is "giving up management rights".
SDJ also asserted that the retail arm's corporate value was overestimated in the merger plan - a measure that it said would exclusively benefit his brother Shin Dong-bin by ultimately enlarging his shares in the newly created holding company.
Several Lotte Group shares barely moved after Shin's decision to sell his stakes.
Shin Dong-joo, the former vice chairman of Tokyo-based Lotte Holdings, has made a decision to sell 97 percent of each interest he owns in Lotte Shopping Co., Lotte Chilsung Beverage Co., Lotte Confectionery Co. and in Lotte Food Co., according to SDJ Corp., which represents the scion. The new establishment is expected to start operating by October 1. Shin Dong-joo has always been opposed to the plan and opted to exercise appraisal rights.
A minority shareholder said that the main reason of the plan was to strengthen Shin Dong-bin's control over group, and that they will have to bear the losses from the change.
August's vote gave Shin Dong-bin a 10.56 percent share in the holding company. It will return to the stock market on October 30.