(LEAD) Lotte Corp. buys 23 pct stake in Lotte Chemical for shareholders

All News 21:09 October 10, 2018

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SEOUL, Oct. 10 (Yonhap) -- Lotte Corp., the holding company of Lotte Group, said Wednesday it has acquired a 23 percent stake in Lotte Chemical Corp. from two affiliates of the retail-to-chemical conglomerate to enhance shareholders' value.

On Wednesday, Lotte Corp. bought the 11.27 percent stake Lotte Property and Development held in Lotte Chemical, and an 11.98 percent stake Hotel Lotte Co. owned in Lotte Chemical in two separate block deals after the market closed, the company said in a statement.

The holding company said its stake investment in Lotte Chemical will help diversify its business portfolio, which currently focuses on retail, food and beverages.

In other efforts to boost shareholders' value, Lotte Corp. decided to cancel 10 percent of its treasury shares on the same day. The company has also decided to transfer 4.5 trillion won (US$3.9 billion) worth of excess capital into an excess income, a sign that Lotte may use some of the excess income as dividends.

Lotte Corp. is set to hold a shareholders' meeting on Nov. 21 to seek approval for the plan.

The move came five days after Lotte Group Chairman Shin Dong-bin was released from jail. He had been in a detention center since February for involvement in a corruption scandal that led to the ouster of former President Park Geun-hye last year.

On Friday, the Seoul High Court sentenced Shin to two and a half years in prison. The appeals court suspended the sentence for four years, meaning that Shin will not have to serve prison time if he stays out of trouble during that period.

Last year, Lotte launched the holding firm in a bid to help Shin solidify his leadership and streamline the group's managerial system.

In April, Lotte eliminated cross-shareholdings of its subsidiaries.

A cross-shareholding system is a hallmark of South Korea's family-controlled conglomerates, known here as chaebol, enabling owner families to control their sprawling business interests.