© Reuters. FILE PHOTO: A man walks past an LG logo at the Mobile World Congress in Barcelona
By Joyce Lee and Shradha Singh
SEOUL / BENGALURU (Reuters) – US-based hedge fund Whitebox Advisors LLC publicly opposed a spin-off plan from South Korea's LG Corp, saying the plan "sacrifices the returns from minority shareholders to solve a family succession issue."
LG Corp announced in November that it would spin off five subsidiaries into a new holding company over the next year. This is the most recent reorganization in one of the family-run conglomerates in South Korea that is being handed over to a new generation of executives.
Analysts had expected the new holding company, led by Koo Bon-joon, a son of the LG founder, to eventually be led by LG Corp. is separated. LG Corp itself is run by Koo Bon-joon's nephew, Koo Kwang-mo, who took over as chairman of LG Group in 2018 after his father's death.
"The spin-off has nothing to do with LG's most pressing problem, namely the unprecedented discount the company is trading at in relation to its assets and, consequently, poorer returns for shareholders," said Whitebox, who has around $ 5,000 in assets. $ 5 billion under management and with offices in the United States, London and Sydney, said.
"We are deeply dismayed that the alleged rationale for this transaction is to help Koo Bon-joon develop his own group of companies like others in his family," he added.
Whitebox urged LG to abandon its current plans and propose a new spin-off that "maximizes value for all shareholders", establishes a corporate governance committee and implements a capital management plan.
Whitebox did not state in its statement how much of LG it owns, only that it is a "long-term shareholder" who has attempted to contact LG's board of directors and management for the past two years.
Whitebox declined to comment further. A LG spokeswoman had no immediate comment.
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