Dismissed founder and father, still obstacle to son’s hegemony
Lotte Group chairman Shin Dong-bin has apparently gained full control of the companies in both Korea and Japan on Tuesday, but it may be too early to pop the champagne as the ousted father and group founder Shin Kyuk-ho emerges as a deal breaker of the son’s hopeful reign of the business empire.
Chairman Shin and his followers successfully repressed the uprising by his older brother in Japan to oust him with the help of the nonagenarian father early this week.
But the wealth of the father, who holds a substantial amount of shares in Lotte’s holding firms, is expected to serve as a swing vote in the final inheritance competition between his two sons — the disgraced elder Dong-joo and the apparent heir and victor Dong-bin.
“If the senior Shin changes his mind and inherits all his shares to the underdog Dong-joo, Dong-bin will not be as confident as he used to be. If Dong-joo-friendly stakeholders shake up the shareholders meeting, things may get ugly,” Shin Yul, a business analyst, was quoted as saying.
Such speculation is possible because Dong-joo and Dong-bin own neck-and-neck amount of shares of Lotte’s major affiliates such as Lotte Shopping, Lotte Chilsung and Lotte Confectionary. Dong-joo falls slightly behind Dong-bin in Korea, but is known to outnumber his younger brother in Japan.
They are said to even hold a similar amount of shares in Lotte Holdings in Japan, the de facto controlling tower of the business group’s governance in both countries. Alongside its 37 Japanese affiliates, Lotte Holdings owns 99.28 percent of Hotel Lotte, which again owns 34.64 percent of Lotte International, 38.34 percent of Lotte Engineering and Construction, 31.07 percent of Lotte Corp. and much more.
But then again, Kojyunsya, a packing company, holds about 27.7 percent stake in Lotte Holdings. The packer also owns 22.84 percent stake in Lotte Aluminum, 5.5 percent in Hotel Lotte and more. And Shin Kyuk-ho is known to own 50 percent of Kojyunsya, while his sons are reportedly powerless there.
“While the senior Shin has inherited most of his shares to his two sons, he didn’t let go of the Kojyunsya stakes, which sustained his power in Lotte until now,” an analyst said.
“There is a possibility that Dong-bin has rubbed his father the wrong way and this may prompt him to throw his assets to the elder brother. If so, this is a disaster for Dong-bin,” he said.
Dong-bin also needs to attract support from other family members to become the leader of the Lotte empire.
The founder’s eldest daughter and Lotte Foundation chairwoman Shin Young-ja’s apparent support for Dong-joo is a hurdle for the peaceful reign of the Lotte chairman. Young-ja reportedly flew to Japan with her father to discharge Dong-bin on Monday and is known to have great influence on her father.
Some suggest that Lotte may split into two groups, which has been a common practice among second and third-generation tycoons here such as Samsung, Kumho and Hyundai.
“The two brothers may agree that Dong-bin takes Lotte’s major businesses while Dong-joo controls the rest,” the expert said.
The Origianl Posted by Bae Ji-sook/ The Korea Herald