US Hedge Fund Sends Letter Opposing LG Affiliate Separation

[Asia Economy Reporter Buaeri] The U.S. hedge fund Whitebox Advisors has expressed opposition to LG Group's plan for affiliate separation.

Major foreign media outlets including the Financial Times reported on the 14th (local time) that Whitebox sent a letter to LG's board opposing the affiliate separation.

In the letter, Whitebox stated, "The recently announced LG affiliate separation plan will fail to create value for minority shareholders," and argued, "LG should focus on its current stock price, which is at 69% of its net asset value."

Whitebox added, "LG, which has a reputation for having the best corporate governance, proposed a plan that prioritizes the family over minority shareholders," and said, "This is why the 'Korea discount' continues."

They continued, "Despite clearly better alternatives, the board unanimously passed a plan that sacrifices minority shareholders to resolve family succession issues," urging, "Stop actions against shareholders under the pretext of improving LG's governance."

Whitebox is a fund led by Simon Waxsley, a former member of the activist hedge fund Elliott Management, and has held about a 1% stake in LG over the past three years. The LG founding family holds 46% of the shares, and Whitebox's stake is about 0.6%, which many analysts believe makes it difficult for Whitebox to have a real influence on LG Group's management rights.

However, with the recent passage of the amended Commercial Act strengthening minority shareholders' rights through the National Assembly, concerns are rising in the business community that attacks by speculative capital may begin.

Regarding Whitebox's opposition to the affiliate separation, LG Group stated, "This spin-off will allow the group to focus its capabilities on businesses such as electronics, chemicals, and telecommunications, thereby increasing shareholder value," and added, "We expect the discount issue to improve once the split is completed and growth strategies become more concrete."

At the end of last month, LG Group held a board meeting and resolved to establish a new holding company centered on five companies including LG Sangsa, LG Hausys, and Silicon Works, and to have the existing holding company, LG Corporation, and the new holding company operate independently starting May next year, followed immediately by pursuing affiliate separation between LG Group and Koo Bon-joon, advisor of LG Corporation.

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