South Korea’s LG says will separate affiliates into new conglomerate

(Reuters) – South Korea’s LG Corp said on Thursday its board had decided to restructure its conglomerate LG Group by separating some of its affiliates such as display chip maker Silicon Works Co Ltd to form a new conglomerate next year.

It is the latest in a series of deals and restructuring of South Korea’s family-led conglomerates as they grow in size and go through generational succession. The reorganisation should also help address regulatory pressure to limit intra-group transactions at family-owned conglomerates.

Koo Bon-joon will be chief executive of the new holding company, according to LG Corp’s regulatory filing. He will take the reins of those affiliates from his nephew Koo Kwang-mo, who took over as LG Group chairman in 2018 after his father passed away.

LG Group is South Korea’s fourth-largest conglomerate and its core businesses include consumer electronics, chemicals, household products and cosmetics, as well as parts such as batteries and displays used in GM, Tesla and Apple products.

Affiliates that will be separated in May 2021 also include trading company LG International Corp, LG Hausys Ltd, maker of interior parts for housing and automobiles, and unlisted chemical manufacturer LG MMA Corp, the regulatory filing said.

The reorganisation also includes a spin-off of unlisted Pantos Logistics Co Ltd. The logistics arm generated 64% of its 2019 revenue from other affiliates of LG Group including LG Electronics and LG Chem, according to its regulatory filing.

Reporting by Joyce Lee; Editing by Ana Nicolaci da Costa