* Revamp will reduce cross shareholding ties to 18 from 67
* Expected to lift control of chairman Shin
(Adds analysts' comments, context)
By Joyce Lee
SEOUL, April 26 South Korea's Lotte Group said
it is setting up a holding company by restructuring the
conglomerate's four listed units to boost operational
transparency, a move analysts say could enhance its chairman's
control amid a power struggle with his brother.
The country's fifth-biggest conglomerate has been under
pressure to resolve its complex structure and improve governance
after a public feud between founding family members that began
in 2015 and has pitted Chairman Shin Dong-bin against elder
brother Shin Dong-joo.
Under the plan unveiled on Wednesday, retailer Lotte
Shopping, Lotte Confectionery, Lotte
Chilsung Beverage and Lotte Food will
each split into two companies, the firms said in filings. Half
of the resulting eight firms will then be combined into one
The setup of the holding company will reduce
cross-shareholding ties to 18 from 67 currently, Lotte Group
said in a statement. Shares of the new entities will begin
trading on Oct. 30 after shareholder approval, it added.
The set-up of the holding company is a chance for better
valuations for the remaining businesses as the split will make
it easier to estimate their operational worth, analysts said.
They also said that the reorganisation starts a process for
Lotte Group chairman Shin Dong-bin to strengthen control of the
group, as his own stake and friendly stakes in the holding
company is expected to outweigh that of his feuding brother.
"The ownership reorganization has an element of
strengthening the owner family's control, but it really touches
on the effective allocation of resources," wrote analysts Yoon
Tae-ho and Yeo Yeong-sang of Korea Investment & Securities in a
note this week.
A Lotte Group spokeswoman declined to comment on the
Both brothers are currently on trial on charges including
embezzlement, while Shin Dong-bin was freshly charged in April
with bribery in the graft scandal that ousted former president
Both have denied wrongdoing.
Lotte had pursued a $4.5 billion initial public offering of
Hotel Lotte last year as part of its plan to resolve
cross-shareholdings before it was scuppered.
Lotte Group maintains it will revive the IPO but has not set
a concrete date.
(Reporting by Joyce Lee; Editing by Randy Fabi and Muralikumar