U.S. hedge fund launches activist campaign against LG's planned spin-off (updated)

LX Hausys

15/12/2020 24:35

(Adds background, quotes from statement)
    By Joyce Lee and Shradha Singh
    SEOUL/BENGALURU, Dec 15 (Reuters) - U.S.-based hedge fund
Whitebox Advisors LLC publicly opposed a spin-off plan by South
Korea's LG Corp  003550.KS , saying the plan "sacrifices
minority shareholder return in order to resolve a family
succession issue".
    LG Corp said in November it would spin off five affiliates
into a new holding company next year, the latest reorganisation
at one of South Korea's family-led conglomerates as they pass to
a new generation of leaders.  urn:newsml:reuters.com:*:nL1N2IC0G4
    Analysts expected the new holding firm, to be headed by Koo
Bon-joon, a son of LG's founder, will eventually be separated
from LG Corp. LG Corp itself is led by Koo Bon-joon's nephew Koo
Kwang-mo, who took over as LG Group chairman in 2018 after his
father died. 
    "The spin-off does nothing to address LG's most pressing
issue, which is the unprecedented discount at which the company
trades relative to its assets and, accordingly, inferior return
to shareholders," Whitebox, which manages about $5.5 billion in
assets and has offices in the United States as well as London
and Sydney, said. 
    "We are deeply dismayed that the purported rationale for
this transaction is to support Koo Bon-joon in developing his
own business group, like others in his family," it added. 
    Whitebox called for LG to stop its current plans and propose
a new spin-off that "maximises value for all shareholders,"
create a corporate governance committee, and implement a capital
management plan.  
    Whitebox in its statement did not say how much of LG it
owns, only that it is a "long-term shareholder" that has sought
to contact LG's board and management in the past two years. 
    Whitebox declined further comment. An LG spokeswoman did not
have an immediate comment.

 (Reporting by Shradha Singh in Bengaluru and Joyce Lee in
Seoul; Editing by Uttaresh.V and Christopher Cushing)
 ((Shradha.Singh@thomsonreuters.com; within U.S. +1 646 223 8780
Ext: 2804, outside U.S. +91 80 6182 2630;))