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Lotte to remove cross-shareholding structure through mergers

2018/01/02 18:10

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SEOUL, Jan. 2 (Yonhap) -- South Korean retail giant Lotte Group said Tuesday it will reduce the number of units that own one another to zero by merging six of its unlisted affiliates with its holding company.

The subsidiaries of Lotte decided to merge its investment departments to the conglomerate's recently launched holding company, Lotte Corp., during their boardroom meetings earlier in the day, the business group said.

In early October, Lotte launched the holding firm in a bid to help Chairman Shin Dong-bin solidify his leadership and boost the group's managerial transparency.

When the merger process is completed, the number of Lotte subsidiaries involved in its intra-group stakeholding links will drop to zero from nearly 50 before the launch of the holding firm.

Under the existing law, Lotte is required to eliminate the cross-shareholdings among its subsidiaries by April.

A cross-shareholding system is a hallmark of South Korea's family-controlled conglomerates, known here as chaebol, which enables them to control their sprawling business empires.

"Lotte will be able to boost the holding firm system's stability and expand its influence on the affiliates," the business group said in a press release.

The latest decision will be put to vote for approval at the shareholder meetings of the holding firm and the six units late next month, it said.

Once approved, the merger should be completed by early April, and the number of subsidiaries under the holding firm will stand at 51, the company added.

Founded in Japan in 1967, Lotte grew into South Korea's fifth-largest conglomerate, driven by its success in the retail, food and amusement businesses. The group's business includes chemicals, duty-free, finance and construction, and it has a global workforce of 125,000.

This photo, taken Dec. 22, 2017, shows the entrance of South Korean retail giant Lotte's department store in Seoul. (Yonhap) This photo, taken Dec. 22, 2017, shows the entrance of South Korean retail giant Lotte's department store in Seoul. (Yonhap)

scaaet@yna.co.kr

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