Governance Advisory Committee Supports LG Split Proposal: "Positive for Both Company and Shareholders"

Human Resource Split Method Also Appropriate... Dividend Policy and Growth Potential Expansion Outlook

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[Asia Economy Reporter Minwoo Lee] The Governance Advisory Committee, an independent body affiliated with the Korea Listed Companies Association, has expressed support for the LG Group's proposed corporate split agenda scheduled for the regular shareholders' meeting on the 26th.

On the 16th, the Governance Advisory Committee announced its support for the LG Group's regular shareholders' meeting agenda. The committee is composed of independent external experts separate from the Listed Companies Association to ensure fairness and independence.

The committee stated, "All members agreed on the necessity of business restructuring to enhance long-term shareholder value through selection and concentration amid stagnation in growth and profitability caused by COVID-19," adding, "We also recognize the need for a business expansion and diversification strategy through the split of business sectors that, despite high growth potential, have not received strategic attention within the group."

If the split agenda passes at the regular shareholders' meeting, the existing holding company LG will focus on its core businesses: electronics, chemicals, and telecommunications services. It also plans to pursue investments in new ESG (Environmental, Social, and Governance), bio, and digital healthcare businesses. The newly established holding company LX Holdings is expected to enhance business specialization and potential value by completing a swift decision-making structure through a board of directors with professional expertise. Through the split and business portfolio restructuring, investment risks will be diversified, and both LG and LX Holdings will strengthen their business-specific expertise and secure new growth engines.

The Governance Advisory Committee believes that this split will, in the long term, improve the holding company's corporate value discount and re-evaluate the relatively undervalued affiliates' worth. Considering the company's dividend policy and growth potential, an expansion of shareholder returns is also anticipated, which is viewed positively for shareholder value in the medium to long term.

The committee also found the spin-off method appropriate. It explained, "It is a suitable choice for establishing an independent management system for lower-priority business divisions and promoting growth by securing efficiency and speed in decision-making," adding, "LG and LX Holdings can continuously maintain their existing business cooperation based on a stable partnership, and from the shareholders' perspective, it is very positive as it grants the option to enjoy shares of both LG and LX Holdings."

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