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Estranged brother Shin Dong-joo sells most Lotte shares

Sept 13,2017
SDJ Corporation Chairman Shin Dong-joo - the estranged elder brother of Lotte Chairman Shin Dong-bin - has sold most of his shares in Lotte Group, according to SDJ on Tuesday.

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.”

The company highlighted that Shin Dong-joo sold the bulk of his shares in four major Lotte subsidiaries - Lotte Shopping, Lotte Chilsung Beverage, Lotte Foods and Lotte Confectionery - following a group stockholders’ vote on Aug. 29 that will convert Lotte into a holding company structure. Shin Dong-joo has long been opposed to the plan and opted to exercise appraisal rights.

According to the meeting results, all four subsidiaries will be divided into operating and holdings entities. The four holding companies will then merge into one with Lotte Confectionery at the helm, which will function as the group’s holding company. It will return to the stock market on Oct. 30.

Shareholders of the four companies that are against the measure can decide to exercise appraisal rights before Oct. 18.

Shin Dong-joo said that Lotte Shopping’s losses and failing business in China would wrongfully jeopardize shareholder value for those small investors of the other three subsidiaries by making them share the retail arm’s risks.

“I express strong concerns on the recent decision from the extraordinary meeting of shareholders, as it is not a favorable move for the future of all four companies,” said Shin Dong-joo, adding that “Lotte Shopping should quickly make moves to pull out of the Chinese market.”

SDJ also asserted that the retail arm’s corporate value was overestimated in the merger plan - a measure that it said would solely benefit his brother Shin Dong-bin by ultimately enlarging his shares in the newly created holding company.

The four affiliates criticized the elder Shin through an official statement for creating frustration in the market and confusion among shareholders based on “wrongful claims,” arguing that the restructuring was designed to clear out Lotte’s complicated cross-shareholding structure.

August’s vote gave Shin Dong-bin a 10.56 percent share in the holding company. Shin Dong-joo’s share at the time was 5.73 percent.


BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]