LG Koo Kwang-mo and LX Koo Bon-joon Complete Share Settlement... Full-Scale Start of Affiliate Separation

Chairman Koo Bon-joon Sells 4.18% Stake in LG Corp to External Investors via Block Deal
CEO Koo Kwang-mo Sells 32.32% LX Holdings Stake to Chairman Koo Bon-joon through OTC Transaction
Affiliation Separation Requirement 'Less than 3% Stake by Same Person' Met... Expected to Conclude in Early Next Year

[Asia Economy Reporter Lee Hye-young] The shareholding arrangement between Koo Kwang-mo, CEO of LG Corporation, and Koo Bon-joon, Chairman of LX Holdings, was finalized on the 14th. Accordingly, the two companies plan to soon apply for a corporate separation with the Fair Trade Commission and complete the separation process by the first half of next year.

According to LG Corporation and LX Holdings, Chairman Koo Bon-joon sold 4.18% of his 7.72% stake in LG Corporation to external investors through a block trade before the market opened on the same day.

As a result, Chairman Koo Bon-joon's LG shares decreased to 2.04%. With the LG shares held by Koo Bon-joon's family, including Executive Director Koo Hyung-mo of LX Holdings, dropping to 2.96%, the requirement for corporate separation under the Fair Trade Act?‘less than 3% stake held by related parties of the same person’?was met. Due to Koo Bon-joon's shareholding adjustment, the stake held by CEO Koo Kwang-mo and his special affiliates in LG Corporation slightly decreased from 45.88% to 41.7%.

Koo Kwang-mo, Chairman of LG Group

At the same time, CEO Koo Kwang-mo of LG Corporation and nine special affiliates signed a contract to sell their 32.32% stake in LX Holdings to Chairman Koo Bon-joon through an over-the-counter transaction. This transaction qualifies as a management rights transfer between related parties under tax law and was conducted at a 20% premium, with the transaction amount totaling approximately 300 billion KRW.

Through this, Chairman Koo Bon-joon and his special affiliates now hold over 40% of LX Holdings shares. This secures a stable position as the largest shareholder and establishes a foundation to independently manage the LX Group.

Chairman Koo Bon-joon is the younger brother of the late Koo Bon-moo, former chairman of LG Group, and the uncle of CEO Koo Kwang-mo. Following the LG family’s principle of eldest son succession, after the passing of former Chairman Koo Bon-moo in May 2018 and CEO Koo Kwang-mo’s ascension to chairman, Koo Bon-joon stepped down from frontline LG management. Subsequently, he separated some affiliates such as LG Sangsa (now LX International) and established the new holding company LX Holdings in May this year, proceeding with the corporate separation process.

Koo Bon-joon, Chairman of LX Holdings

Meanwhile, Chairman Koo Bon-joon donated 1.5% of his LG Corporation shares (approximately 200 billion KRW) to three LG public interest foundations: LG Yeonam Cultural Foundation, LG Sangnok Foundation, and LG Welfare Foundation, actively participating in social contributions that have continued since the late founder Koo In-hoe’s era.

An LG official stated, "The group’s beautiful tradition of corporate separation without management disputes for over 70 years has continued this time as well," adding, "We expect this to be an opportunity to be stably evaluated in the market for the intrinsic corporate value of each holding company, free from uncertainties of stock transactions."

LG and LX Holdings plan to apply for corporate separation with the Fair Trade Commission now that the biggest obstacle?the shareholding arrangement?has been completed. Both sides expect the separation to be finalized by the first half of next year.