South Korea conglomerate LG Corp. will spin off five affiliates and place them with a new holding company, it said Friday.
The decision is the latest reorganization of one of the country's big family-led conglomerates.
LG said the holding company will be led by Koo Bon-joon, the son of LG's founder. The company will operate separately from LG, which will be led by Koo Bon-joon's nephew Kwoo Kwang-mo. The latter took over LG Group as its chairperson in 2018 after his father died.
Family-led South Korea conglomerates, known as "chaebols," have slowly been breaking up into smaller companies led by the children of their founders. At the turn of the century, companies such as LG, Hyundai, SK Group and Samsung restructured to pass control of subsidiaries to family members.
"There are cases like LG that settle this quietly, but in many conglomerates, this has led to feuds," analysts said.
LG, the fourth-largest chaebol, said that the spinoff should allow each company to focus on its respective core businesses. While LG will focus on manufacturing electronics, the spinoff holding company will focus on making batteries and displays for international corporate customers such as Tesla, Apple and General Motors.
The holding company will take control of trading company LG International Corp., housing and automotive interior parts manufacturer LG Hausys Ltd., chemical manufacturer LG MMA Corp. and chipmaker Silicon Works Co. Ltd.
According to its filing with regulators, the four companies will be spun off from LG May 2021. Another unannounced affiliate will also be spun off later.
LG will be left with assets of around 9.8 trillion won ($8.85 billion), while the new holding company will have assets of around 900 billion won. The holding company will be listed on the country's stock market next year.
