LG Group to Establish Holding Company, Separating LG Sangsa and LG Hausys (Update)

[Asia Economy Reporter Changhwan Lee] LG Group is establishing a holding company to separate affiliates such as LG Sangsa, Silicon Works, LG Hausys, LG MMA, and Pantos.

LG Corporation held a board meeting on the 26th and resolved a split plan to divide the investment sectors of four subsidiaries?LG Sangsa, Silicon Works, LG Hausys, and LG MMA?out of the 13 subsidiaries under LG Corporation, to establish a new holding company tentatively named ‘LG New Holding Corporation (tentative).’

The plan is for ‘LG New Holding Corporation (tentative)’ to incorporate these four companies as subsidiaries and include Pantos, under LG Sangsa, as a subsidiary.

‘LG New Holding Corporation (tentative)’ is planned to operate under an independent management system with a new board of directors.

The board will consist of internal directors including Koo Bon-joon, LG Advisor (CEO), Song Chi-ho, LG Sangsa Advisor (CEO), and Park Jang-su, Executive Director of LG Corporation’s Finance Team. External directors appointed are Kim Kyung-seok, former CEO of Yuri Asset Management; Lee Ji-soon, Professor Emeritus of Economics at Seoul National University; Jung Soon-won, former member of the Financial Monetary Policy Committee; and Kang Dae-hyung, Adjunct Professor at Yonsei University Graduate School of Economics. Additionally, Kim Kyung-seok, Lee Ji-soon, and Jung Soon-won will be appointed as audit committee members.

LG Corporation plans to reorganize into two holding companies?the continuing company LG Corporation and the newly established ‘LG New Holding Corporation (tentative)’?effective May 1, following approval of the company split at the regular shareholders’ meeting on March 26, 2021.

The company explained that this board resolution reflects the judgment that it is necessary to promptly transition to a structure that can further specialize the business portfolio management area of the holding company.

After the split, the continuing company LG Corporation will focus its capabilities and resources on electronics, chemicals, and telecommunications services, while the new holding company will nurture business companies with growth potential as core enterprises to maximize the corporate value of each holding company and its subsidiaries.

Since Chairman Koo Kwang-mo’s inauguration in 2018, LG has strengthened growth engines such as batteries, large OLEDs, and automotive electronics while downsizing non-core businesses like fuel cells, water treatment, and LCD polarizers through sales, following a ‘selection and concentration’ strategy for its business portfolio. Upon completion of this split, the three-year business structure reorganization is expected to conclude.

An LG official stated, “LG, the first major domestic company to transition to an advanced holding company governance structure, has continuously specialized its business areas and management capabilities to strengthen business competitiveness,” adding, “We expect that when pursuing affiliate separation in the future, this will simplify the group’s governance, resolve uncertainties, and align with the direction of mitigating economic power concentration among large corporations.”

This content was produced with the assistance of AI translation services.