[비즈한국] Attention is focused on the background of the Hoban Group’s acquisition of a stake in LS006260, the holding company of LS Group. While some have suggested that the Hoban Group may be eyeing management control of LS Group, this is realistically unlikely. However, if the Hoban Group secures a stake of 3% or more in LS Corp, it could potentially influence LS Group's management through actions such as exercising shareholder proposal rights.
According to business industry sources, the Hoban Group recently acquired approximately 3% of LS Corp shares. A Hoban Group representative stated, "We purchased the shares for simple investment purposes, seeing the growth potential in the power industry." LS Cable & System, a subsidiary of LS Corp, has seen its performance rise, with revenue growing by 8.82% from 6.2171 trillion KRW in 2023 to 6.7653 trillion KRW in 2024, and operating profit increasing by 18.07% from 232.5 billion KRW to 274.5 billion KRW during the same period. LS Cable & System is an unlisted company, meaning the rise in its corporate value can be reflected in the stock price of LS Corp.
Some speculate that the Hoban Group has management control of LS Group in mind. Jang Jae-hyuk, a researcher at Meritz Securities, noted, "The Hoban Group officially emphasizes that this stock purchase is purely for financial investment purposes, but there is cautious observation in some quarters that it could be a strategic move to influence LS Group's management structure."
The possibility of a management dispute is also fueled by the ongoing conflict between Hoban Group affiliate Taihan Cable & Solution001440 and LS Cable & System. LS Cable & System filed a lawsuit in 2019, claiming that Taihan Cable & Solution used its patents without authorization. Both the first and second-instance courts ruled in favor of LS Cable & System. On March 13, following the second-instance ruling, Taihan Cable & Solution stated, "We will decide whether to appeal after a thorough review of the written judgment." BizHankook's investigation reveals that Taihan Cable & Solution has not yet filed an appeal.
There is also controversy regarding the alleged leak of LS Cable & System's submarine cable factory design know-how to Taihan Cable & Solution. The allegation is that an architect who handled the design for LS Cable & System’s factory later designed a submarine cable factory for Taihan Cable & Solution, and that LS Cable & System's technology was leaked during this process. Police launched an investigation into the matter last November.
When news of the Hoban Group's acquisition of LS Corp shares broke, the stock price of LS Corp surged. It rose 18.96% from 101,800 KRW on the 12th to 121,100 KRW the following day, the 13th. On the 14th, it recorded 130,100 KRW, up 7.43% from the previous trading day. This is interpreted as the market reacting to the possibility of a management dispute. The Hoban Group did not provide a specific answer when asked if it was interested in managing LS Group.
LS Group Chairman Koo Ja-eun and related parties hold a total stake of 32.12% in LS Corp. Based on the closing price of 122,800 KRW on the 18th, the value of the stake held by Chairman Koo Ja-eun's family amounts to approximately 1.27 trillion KRW. In other words, if the Hoban Group were to invest more than 1.27 trillion KRW to purchase shares, it could theoretically seize management control.
The Hoban Group currently holds a 17.90% stake in Hanjin KAL180640. Based on the closing price of 83,500 KRW on the 18th, the value of this stake is 997.6 billion KRW. If the Hoban Group sells its Hanjin KAL stake to acquire LS Corp shares, it would not require significant additional costs. The Hoban Group is also known to hold substantial cash. According to its audit report, Hoban Construction's cash and cash equivalents reached 999.4 billion KRW as of the end of 2023.
However, analysts in the securities industry agree that it is realistically difficult for the Hoban Group to secure control of LS Group. LS Corp holds 15.07% in treasury shares. While treasury shares do not have voting rights, they can be transferred to a third-party ally to exercise those rights. In such a scenario, Chairman Koo Ja-eun's side could increase their stake to 47.19%. Chairman Koo also has the option of retiring the treasury shares; if LS Corp retires them, the stake held by Chairman Koo's side would increase to 37.82%.
The National Pension Service (NPS) also holds a 12.86% stake in LS Corp. Combining the stakes of Chairman Koo Ja-eun's family, the NPS, and the treasury shares reaches nearly 60%. Even if the Hoban Group purchased all the shares currently circulating in the market, it would only amount to about 40%. In short, for the Hoban Group to secure management control, it would need to buy up all the minority shareholder stakes and have the National Pension Service side with it. Given that there are currently no major controversies within LS Group, it is highly unlikely that the NPS would side with the Hoban Group. A business industry source commented, "Given the current ownership structure, the idea of the Hoban Group securing management control of LS Group sounds like fiction."
There are variables. While Chairman Koo Ja-eun and related parties hold 32.12% of LS Corp, Chairman Koo’s personal stake is only 3.63%. The 32.12% stake is distributed among 45 people, including the chairman, his family, and related parties. The stake is relatively evenly held among these 45 individuals rather than concentrated in the hands of a few.
A new phase could begin if any member of Chairman Koo Ja-eun's family were to join hands with the Hoban Group. In a similar case, Cho Hyun-ah (who changed her name to Cho Seung-yeon), a former vice president of Korean Air, previously fought a management battle against her younger brother, Hanjin Group Chairman Cho Won-tae, by teaming up with KCGI and Bando Engineering & Construction. However, there has been no particular discord within the LS Group owner family. When LS Group split from LG Group in 2003, the owner family agreed to rotate the chairmanship, a principle that continues to this day.
Nevertheless, the Hoban Group could still exert influence on LS Group. Under current law, holding a stake of 3% or more grants rights such as the power to make shareholder proposals, convene extraordinary general meetings of shareholders, and inspect accounting books. LS Group cannot help but be concerned. As the Hoban Group has not shown any specific movement, LS Group has not issued an official statement.