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Korean retail giant Lotte Group’s confectionary affiliate said Wednesday that Japan-based Lotte Holdings has offered to buy 259 billion won ($219.6 million) worth of shares in the firm, a move that will help the group chairman strengthen his control amid a prolonged succession dispute with his brother.
The Japanese firm will buy 7.9 percent shares of Lotte Confectionary at 2.3 million won per share from the market during trading hours by Dec. 28, the company said in a regulatory filing.
“By boosting stakes in Lotte Confectionery, Lotte Holdings will be able to improve efficiency based on the potential synergies between the two firms,” it said in a press release.
Once the purchase is completed, Japan’s leading confectioner will emerge as the second-largest shareholder of the Korean firm with a 10 percent stake. It bought a 2.1 percent stake in the firm on Nov. 4.
Tightening its grip on Lotte Confectionery means having the group’s key affiliate under control as it holds stakes in Lotte Shopping and Lotte Chilsung.
Industry insiders said Lotte Holding’s recent decisions to increase its stake in the Korean confectionery unit is to show its support for Shin Dong-bin — the Lotte Group chairman and Lotte Holdings vice chairman — who has been at war with his brother Shin Dong-joo over control of the group since July.
With Lotte Holdings’ backing, the incumbent chairman who holds an 8.78 percent stake in the Korean unit can cement his leadership over the group, whose portfolio ranges from food to retail mostly in South Korea and Japan.
Dong-joo, the former Lotte Holdings vice chairman who led the Japanese operations until January, owns a 3.96 percent stake while his father and Lotte founder Shin Kyuk-ho holds a 6.83 percent stake in Lotte Confectionery.
Meanwhile, the chairman said he would consider listing Lotte Holdings on the Japanese stock market to build a management structure free of the founding family’s feuding.
During an interview with Japanese media outlet the Nikkei, he said the market debut will be discussed after the Korean initial public offering of Hotel Lotte, slated for the first half of 2016.
“Coming under tighter scrutiny in the market will enhance the company’s structure and establish transparent corporate governance,” Shin said.