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CJ Group Begins Father-to-son Managerial Succession Process
Chairman's Son Secures Stake in Holding Firm
CJ Group Begins Father-to-son Managerial Succession Process
  • By Michael Herh
  • April 30, 2019, 10:54
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CJ Group chairman Lee Jae-hyun's eldest son Lee Sun-ho, manager of CJ CheilJedang, has recently secured a stake in the group’s holding company, signaling that the group has started a management succession process. 

CJ Group chairman Lee Jae-hyun's eldest son Lee Sun-ho, manager of CJ CheilJedang, has recently secured a stake in the group’s holding company for the first time through stock exchange between subsidiaries. As Lee put his name on the holding firm’s shareholder list, market experts say that CJ has started the process of transferring management control.

CJ Group announced on April 29 that it has split its subsidiary, CJ OliveNetworks Co., into two entities: Olive Young, a health and beauty company, and an information technology entity which will become a subsidiary of CJ Corp.

CJ OliveNetworks and CJ Corp. reported the spin-off and stock swap to their board of directors and received approval on the same day. Accordingly, the IT sector of CJ OliveNetworks will be incorporated into a subsidiary wholly owned by CJ. The stock exchange ratio will be 1:0.5444487 and treasury stocks will be distributed instead of new shares considering the shareholder value. CJ Power Cast Inc., a subsidiary of CJ OliveNetworks, will be incorporated into the IT sector of the wholly owned subsidiary. The IT sector and CJ Power Cast posted 707 billion won (US$609.75 million) in consolidated sales and 47 billion won (US$40.53 million) in operating profit in 2018.


The catch here is that chairman Lee’s eldest son has secured a stake in CJ Corp., which is at the top of the group’s corporate governance structure, for the first time through the latest stock exchange. The junior Lee, who has a 17.97 percent stake in CJ OliveNetworks, has secured a 2.8 percent stake, or 800,000 shares, in CJ Corp. In addition, chairman Lee’s eldest daughter Lee Kyeong-hoo, director of CJ ENM Corp., has acquired an additional 1.1 percent stake, or 308,000 shares, in CJ Corp., increasing her stake to 1.2 percent.

In this regard, analysts say that CJ Group has begun succession of management to the fourth generation. The split of CJ OliveNetworks will have a positive effect on reducing intra-group sweetheart transactions designed to benefit the owner family. The Fair Trade Commission suspects that the owner family has been using CJ OliveNetworks as a means of enriching themselves through sweetheart deals with other subsidiaries.