No Work, No Inheritance for the Eldest... 30 Billion KRW in Shares Gifted to Second Daughter on Long-term Leave [Heirs]

Seo Kyung-bae, Chairman of Amorepacific, has gifted shares worth 30 billion won to his second daughter, Hojung Suh, signaling a shift in the succession structure. With his eldest daughter, Minjung Suh, stepping away from the front lines of management due to an extended leave of absence, the transfer of shares to the younger daughter is intensifying the competition between the sisters for the successor position at Korea’s top cosmetics company.

From the left, Minjung Suh, the eldest daughter of Amorepacific, and Hojung Suh, the second daughter. Amorepacific

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According to the electronic disclosure system of the Financial Supervisory Service on April 26, Chairman Seo Kyung-bae gifted 190,000 common shares to his second daughter, Hojung Suh, on March 27. This accounts for 0.27% of Amorepacific’s total issued shares, amounting to approximately 30 billion won. As a result of this transaction, Chairman Seo’s stake in Amorepacific decreased from 9.02% (6,228,072 shares) to 8.74% (6,038,072 shares), a drop of 0.28 percentage points. Nevertheless, there is no change in the overall governance structure of the Amorepacific Group.

The company explained that this gift was intended to help Hojung Suh secure the funds required to pay the gift tax in installments, after receiving shares of the holding company, Amorepacific Holdings, from Chairman Seo. Previously, in February 2021, Seo Kyung-bae gifted 100,000 common shares of Amorepacific Holdings to Hojung, followed by another transfer in May 2023 of 672,000 common shares and 1,728,000 preferred shares.

Industry sources interpret this latest gift of Amorepacific shares as a move to secure funds for tax payments, while also laying the groundwork for Hojung Suh to strengthen her control over the Group. By converting common shares into cash to cover tax liabilities, and potentially converting preferred shares into common shares in the future, her influence over the Group’s governance could be expanded.

In reality, between February 9 and 20, Hojung Suh sold 7,880 Amorepacific shares and 256,795 Amorepacific Holdings shares on the open market. The Amorepacific shares she sold were worth approximately 1.2 billion won, and the Amorepacific Holdings shares about 8.9 billion won, totaling approximately 10.1 billion won.

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The shares sold by Hojung Suh were voting common shares, while she retained the 1,728,000 preferred shares that will be converted into common shares in 2029. These preferred shares represent a 12.77% stake in the holding company. Although these preferred shares do not carry voting rights and are priced lower than common shares, thereby reducing the gift tax burden, they could significantly impact the ownership structure once converted to common shares in the future. While her current influence is limited, this method of succession could allow her to expand her control over the Group in the coming years.

For a long time, Minjung Suh, the eldest daughter, was considered the primary successor to Amorepacific Group.

In 2012, she received 141,791 shares of Etude (19.5% stake), 39,788 shares of Espoir (19.5%), and 44,450 shares of Innisfree (18.18%) from Chairman Seo. At the time, the market widely viewed these gifts as a prelude to succession of management rights.

However, in September 2022, Minjung Suh sold all her shares in Etude and Espoir-these were canceled through capital reduction, both gratis and paid. In June 2023, she donated 23,222 shares (9.5% stake) of Innisfree that she held to the Seo Kyung-bae Science Foundation, effectively giving away half of the shares she had received as a gift.

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Born in 1991, Minjung Suh graduated from Cornell University with a degree in economics and worked at the global consulting firm Bain & Company before joining Amorepacific’s Osan Plant SCM SC Manufacturing Technology Team as a regular employee in January 2017. After working for six months, she resigned and completed an MBA at Cheung Kong Graduate School of Business in China over two years. In 2019, she rejoined Amorepacific’s Beauty Sales Strategy Team, but after her divorce in 2021 and subsequent reports of discord with her father, she began an extended leave of absence in July 2023, which continues to this day.

The second daughter, Hojung Suh (born 1995), graduated from Cornell University’s School of Hotel Administration in 2018 and joined Osulloc. In July last year, she joined Osulloc’s Product Development (PD) Team, a subsidiary of Amorepacific Group, as a new employee, where she is currently engaged in product development and marketing work.

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The strong performance of Osulloc, regarded as a new growth engine for the Group, is further supporting the succession structure favoring the second daughter. Osulloc recorded annual sales of 110.8 billion won last year, surpassing the 100 billion won mark for the first time since its spin-off. Operating profit also grew nearly threefold, from 3.2 billion won in 2021 to 9.2 billion won in 2024, and reached 11.5 billion won last year, surpassing the 10 billion won threshold for the first time. Recently, Osulloc has also expanded into the wellness sector, such as operating a tea bar at CJ Olive Young’s wellness platform ‘Olive Better.’

In the commemorative speech for the 80th anniversary of the company’s founding last year, Chairman Seo presented a vision to nurture Osulloc, inner beauty, and wellness sectors, as well as beauty devices, as new growth engines, aiming to develop Amorepacific into a global beauty and wellness company with annual sales of 15 trillion won within the next decade.

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Amorepacific was founded by Yun Dokjeong, the mother of the late founder Suh Sungwhan, who started the business by making and selling hair oil in Kaesong. Suh Sungwhan then established ‘Taepyeongyang Chemical,’ laying the foundation for today’s Amorepacific Group.

During this process, the succession also broke with the traditional ‘firstborn son’ principle. Although Seo Kyung-bae was the second son, his management capabilities were recognized, and he succeeded in building the cosmetics business into a global beauty company, making him a representative example of merit-based succession.

This precedent could influence the current succession structure as well. As a competitive structure has emerged rather than a ‘firstborn daughter first’ principle, there is growing attention on the direction of future succession. Currently, the combined stake (common and preferred shares) held by Minjung Suh and Hojung Suh stands at 2.84% and 2.28%, respectively, a gap of only 0.56 percentage points. Considering the potential conversion of preferred shares held by Hojung Suh into common shares, the difference between the sisters’ stakes is extremely small. The 45,251,829 shares (50.28%) of Amorepacific Holdings owned by Chairman Seo Kyung-bae are likely to play a decisive role in determining the future succession structure.

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