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December 12, 2018

LG chief adds momentum to streamlining of affiliates

PUBLISHED : October 07, 2018 - 16:45

UPDATED : October 07, 2018 - 16:45

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[THE INVESTOR] LG’s fourth-generation leader Koo Kwang-mo has focused on streamlining the group’s affiliates for the last three months since taking the helm of the fourth-biggest conglomerate in Korea, boosting expectations of an upcoming organizational reshuffle by year-end, according to the industry on October 7. 

Oct. 6 marked the 100th day since Koo’s inauguration as chairman and CEO of LG Corp., the holding company of 70 affiliated businesses, and industry watchers have noted that the 40-year-old chief is gearing up for major changes in the pan-group business structure. 

The group decided Oct. 5 to sell its 19.9 percent stake in Pantos Logistics, whose largest shareholder is LG International Corp. with a 51 percent stake, as part of the group’s streamlining efforts. This has numerous implications for the business community. 

In September, the group decided to sell the maintenance, repair and operation business of affiliated Serveone. 


LG Chairman Koo Kwang-mo (right) looks at an organic light-emitting diode display at LG Science Park in Magok, northwestern Seoul, in September.



LG officials said that the sale was aimed at raising transparency in management and following the government regulation that sets the upper cap of a holding firm’s stake in a subsidiary at 20 percent. However, the decision fueled speculation on the possibility of Vice Chairman Koo Bon-joon’s departure from his post. 

The sale of the stake in Pantos raises the possibility of a scenario in which Vice Chairman Koo takes over LG International and establishes a new group, as part of the group’s tradition of reshaping affiliates under new leadership. 

LG International was one of the affiliates rumored as likely to be taken over by the vice chairman -- the chairman’s uncle -- to allow his independence from the new-generation leadership.

“Of the 19.9 percent stake in Pantos, Chairman Koo Kwang-mo holds 7.5 percent that could be used as a financial source to fund his inheritance tax payment,” said an industry insider. “The Pantos sale is also seen as preparation for Koo Bon-joon’s independence.” 

The older Koo’s move will be announced in late November, along with the group’s planned business and organizational reshuffle that is expected to be larger than usual under the new leadership.

“It seems the LG chairman is very seriously planning for a new business structure for the group,” said an industry official. “He is likely to focus more on internal group issues until the end of the year, refraining from engaging in public activities.”

Under the junior Koo, LG is anticipated to focus on new areas of businesses, such as artificial intelligence, car electronics, robots and cutting-edge displays.

By Song Su-hyun/The Korea Herald (song@heraldcorp.com

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