Lotte shares con­tinue slide due to fam­ily feud

The China Post - - WORLD BUSINESS - BY CHUNG JOO- WON

The share val­ues of Lotte Group af­fil­i­ates con­tin­ued to slide last week as the found­ing fam­ily’s feud over the suc­ces­sion process within the re­tail gi­ant has tar­nished their im­age.

The slide be­gan on July 28, when the power game be­tween Shin Dong-joo and Shin Dong­bin, the el­der and younger sons of Lotte Group founder Shin Kyuk-ho, be­came public.

The shares of seven listed Lotte af­fil­i­ates have fallen an av­er­age 2.81 per­cent in the nine trad­ing days from July 28 through Aug. 7. The fall was twice as sharp as the 1.42 per­cent fall of the bench­mark KOSPI av­er­age dur­ing the same pe­riod.

Among the seven ma­jor Lotte af­fil­i­ates, Lotte In­sur­ance saw the largest dip in share price. The in­surer closed at 2,985 won per share, down 8.58 per­cent over the past nine trad­ing days.

Shares of Lotte Chem­i­cal, Lotte’s No. 1 af­fil­i­ate in mar­ket cap­i­tal­iza­tion, dipped to 240,500 won, down 4.65 per­cent from 252,000 won.

Lotte Con­fec­tionery and Lotte Chilsung Bev­er­age also saw shares slide 4.12 per­cent and 2.65 per­cent, re­spec­tively. Lotte Shop­ping, the op­er­a­tor of Lotte Depart­ment Stores, joined the downslide along with Lotte Mart, Lotte Su­per and Lotte Cin­ema. Mean­while, the other two listed Lotte Group af­fil­i­ates, Lotte Hi­mart and Lotte Foods, saw slight gains of 1.75 per­cent and 0.88 per­cent, re­spec­tively.

Lotte af­fil­i­ates’ share prices con­tin­ued to fall de­spite the younger Shin’s public apol­ogy over the fam­ily feud on Aug. 3.

Re­turn­ing from Lotte Hold­ings Ja­pan, Lotte Group chair­man and heir ap­par­ent Shin Dong-bin said he would “re­solve the cri­sis and swiftly nor­mal­ize the com­pa­nies.”

Yet ex­perts es­ti­mated that Lotte shares may slide fur­ther, as gov­ern­ment reg­u­la­tors have launched an in­ves­ti­ga­tion into Lotte’s own­er­ship struc­ture, money trans­fers and over­seas oper­a­tions.

On Aug. 6, the Fair Trade Com­mis­sion and South Korea’s rul­ing Saenuri Party agreed to or­der fam­ily-run con­glom­er­ates to re­port their stakes in over­seas oper­a­tions. The move aims to in­crease trans­parency of chae­bol gov­er­nance, on the premise that cross-share­hold­ing can cause se­ri­ous mar­ket con­fu­sion.

On the same day, Fi­nance Min­is­ter Choi Kyung-hwan said in a tax pol­icy re­view meet­ing that Lotte Group’s own­er­ship struc­ture and money flows would be thor­oughly re­viewed.

“It is re­ally dis­ap­point­ing for the (coun­try’s) fifth-largest con­glom­er­ate to be hit by a suc­ces­sion war,” the min­is­ter added.

AP

Lotte group Chair­man Shin Dong-bin, cen­ter, bows prior to a press con­fer­ence at Gimpo Air­port in Seoul, South Korea, Mon­day, Aug. 3.

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