Chung Yong-jin, Chairman of Shinsegae Group, has decided to purchase the entire stake in E-Mart held by General Chairman Lee Myung-hee. The decision by Chairman Chung to opt for a purchase instead of a gift is interpreted as a statement of his commitment to “responsible management” and confidence in growth. This move also addresses one of the tasks related to future spin-offs.
E-Mart announced on the 10th that Chairman Chung will buy 10% of the E-Mart shares owned by General Chairman Lee. Starting from that day until March 11th, over 30 trading days, Chairman Chung will acquire 2,787,582 common shares of E-Mart (10.0%) through after-hours trading. The purchase price is 76,800 won per share, totaling approximately 214 billion won. Once the acquisition is complete, Chairman Chung’s stake in E-Mart will increase to 28.56%.
Chairman Chung’s decision to invest approximately 214 billion won to purchase E-Mart shares instead of waiting for a gift from General Chairman Lee is seen as a declaration of his will for responsible management as E-Mart’s largest shareholder.
Since his promotion to chairman in March, Chairman Chung has emphasized responsible management by establishing a system of rewards and penalties and reforming the executive compensation system to be performance-based.
An E-Mart representative stated, “This stock purchase plan is a measure by Chairman Chung to further strengthen responsible management based on performance as E-Mart’s largest shareholder.” They added, “In an uncertain domestic and international environment, Chairman Chung’s investment of personal assets to purchase E-Mart shares demonstrates his sense of responsibility and confidence in enhancing E-Mart’s corporate value to the market.”
With this stock purchase, the issue of spin-offs has also been addressed. Last October, Shinsegae Group promoted Chung Yoo-kyung, who was leading the department store sector, to chairman, officially signaling a spin-off.
Since 2011, when Chairman Chung Yong-jin took charge of E-Mart and Chairwoman Chung Yoo-kyung took charge of the department store business, Shinsegae Group has been preparing for the separation of affiliates, but it was only officially acknowledged last October.
In 2020, General Chairman Lee gifted shares, giving Chairman Chung an 18.6% stake in E-Mart and Chairwoman Chung Yoo-kyung an 18.6% stake in Shinsegae, while General Chairman Lee maintained a 10% stake in both E-Mart and Shinsegae. The settlement of shares held by General Chairman Lee was essential for the spin-off, a task which Chairman Chung completed by purchasing the 10% stake in E-Mart.
The impact of this stock acquisition on Shinsegae Group’s designation of a “same person” is also a variable. Although Chairman Chung Yong-jin was promoted to group chairman last March, the Korea Fair Trade Commission announced in May that General Chairman Lee Myung-hee was the designated “same person,” not Chairman Chung.
This judgment was based on the belief that General Chairman Lee still effectively controlled Shinsegae Group. However, with General Chairman Lee’s E-Mart stake now reduced to 0% and only a 10% stake in Shinsegae remaining, there is a possibility that the “same person” designation may change.