“Former vice chairman Shin Dong-joo and some family members had arbitrarily taken the general chairman (founder) who is aged and having difficulties in movement and judgment, and induced verbal dismissals”, Lotte Group of Korea said in a statement.
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In contrast, Lotte Group said in a statement that the holding company’s board would not have sided with the younger son if it had not been confident of commanding sufficient votes.
“I will fulfill my duty and responsibility as leader, and put forth the best efforts for Lotte’s businesses in South Korea and Japan in accordance with the philosophy of Shin Kyuk-ho”, Dong-bin was quoted saying.
The move follows major power shifts at the group.
Shin Kyuk-ho, an ethnic Korean, founded Lotte in Tokyo in 1948 and later expanded to South Korea.
The latest twist in the succession battle between 92-year-old founder Shin Kyuk-ho’s two sons saw the younger gain the upper hand in controlling the holding company this week, although the father appears to have suddenly switched his allegiance to his older son. The daughter has a 0.74 percent stake of Lotte Shopping.
Shares of Lotte’s listed South Korea affiliates rose for a third day straight on Thursday. Kwang Yoon Sa, a packaging company also based in Tokyo, is said to be owned by the founder, according to the Korea Economic Daily.
The founder and the eldest son could not be immediately reached for comment.
“Whoever holds Lotte’s holding companies in Japan pretty much holds the entire group because of how the group’s corporate governance structure is designed”, Chae said.
Executive suite – A Lotte Group employee passes the retail giant’s headquarters in Jung District, downtown Seoul, on Tuesday. In a shareholder meeting held on July 16, Shin Dong-bin, the founder’s younger son, was appointed as the head of Lotte Holdings. Analysts are wondering if the feud between the brothers will continue, since they own a similar amount of shares in Lotte affiliates.
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Shares in Lotte Shopping Co Ltd and Lotte Confectionery Co Ltd surged 7% and 5% respectively on Wednesday after the founder was sacked from his position as Lotte Holdings co-CEO following an attempt to dismiss six members of the board, including Dong-bin. Less than two weeks ago, Samsung Group narrowly defeated billionaire activist investor Paul Elliott Singer in a hotly-contested proxy fight, paving the way for the founding Lee family to tighten its grip over the nation’s largest conglomerate.
