- It was once a great blessing for an emperor to have a son. But if he has more than one, succession could threaten to unravel the empire - especially if his grip was weak.
In South Korea, family-run conglomerates tend to control their labyrinthine holdings with the minimum possible capital outlays. While Hong Kong tycoons typically maintain 40 per cent to 50 per cent stakes to keep their crown jewels close, Korean billionaires often hold around half that. This approach can create a host of problems when there's a transition of power, and investors are already profiting from a potential palace coup.
That's certainly the case with Lotte. Five years ago, Shin's two sons - Shin Dong-joo, the elder, and Shin Dong-bin - were already jockeying for power as their father's health declined. In July 2015, Dong-joo said Shin had ordered the removal of Dong-bin from the board of Lotte Holdings of Japan. That very day, Dong-bin convened a board meeting and stripped his father of the chairman title. Lotte Corp's conglomerate discount widened to 45.8 per cent, or roughly US$1.
But all isn't lost for Dong-joo. The wild card is an 11.1 per cent stake in Lotte Corp held by Hotel Lotte, which is controlled by Lotte Japan. The elder brother could significantly boost his indirect stake in the conglomerate's Japanese operation by winning over an employees' union that holds a 28 per cent share. This could put Dong-joo in a position to renew his bid for Lotte Corp's crown.
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