Hyundai Department Store·Hyundai Green Food, Personnel Split in Investment and Business Divisions... "Maximizing Shareholder Value"

Finalized as of March 1 Next Year
Completion of Holding Company System
No Consideration of Affiliate Separation at All

[Asia Economy Reporter Lim Chun-han] Hyundai Department Store Group's core affiliates, Hyundai Department Store and Hyundai Green Food, will each split through a spin-off to separate their investment divisions (holding companies) and business divisions (operating companies).

On the 16th, Hyundai Department Store and Hyundai Green Food each held board meetings and announced that they approved the agenda to spin off into holding companies and operating companies. A spin-off means that existing shareholders receive shares of the newly established company in proportion to their shareholding, contrasting with a split where the existing company owns shares of the new company.

The split of the two companies is scheduled to be finalized on March 1 of next year after an extraordinary general meeting of shareholders planned for February. Hyundai Department Store and Hyundai Green Food aim to incorporate their core business subsidiaries and are reviewing various methods, including a paid-in capital increase through an exchange tender offer involving contribution in kind (issuing new shares instead of cash as payment for purchasing shares). The plan is to complete the transition to a holding company system through the incorporation of core business subsidiaries.

Hyundai Department Store Group stated that it is not considering any possibility of affiliate separation following the spin-off and transition to a holding company system. A group official explained, “Hyundai Department Store and Hyundai Green Food have been the group's key affiliates and have effectively functioned as holding companies in the past; this move is simply to clearly structure that role,” adding, “The business synergy between the two companies is very strong, so affiliate separation is not being considered at all.”

◆Hyundai Department Store splits into Hyundai Department Store Holdings and Hyundai Department Store

Hyundai Department Store will be divided through a spin-off into the newly established Hyundai Department Store Holdings and the continuing Hyundai Department Store. The split ratio is 23.24% for Hyundai Department Store Holdings and 76.76% for Hyundai Department Store. Hyundai Department Store Holdings, as a holding company, will have Hyundai Department Store and Hanmu Shopping as subsidiaries, serving as cash cows based on strong cash generation, and will support each company to become specialized entities in different new business areas within the distribution industry.

Hyundai Department Store will take on the role of developing and presenting new models for offline stores, such as ‘The Hyundai Seoul,’ which is its core business. Additionally, it will keep Hyundai Department Store Duty Free, which it fully owns, and Jinus, acquired earlier this year, as subsidiaries considering the original entry purpose and business relevance, to strengthen business synergy. Hanmu Shopping plans to focus on expanded business areas beyond the existing department store business, including new premium outlets and online sectors, developing offline store domains to a higher level.

◆Hyundai Green Food splits into Hyundai GF Holdings and Hyundai Green Food

Hyundai Green Food will spin off into Hyundai GF Holdings and Hyundai Green Food. The split ratio is 65.32% for Hyundai GF Holdings and 34.68% for Hyundai Green Food. The company plans to incorporate the newly established company as a subsidiary to complete the holding company transition of the continuing company. Hyundai GF Holdings, as a holding company, will manage subsidiaries such as Hyundai Livart and Hyundai Easywell and handle new business investments, while Hyundai Green Food, as an operating company, will focus on food businesses such as group catering, food material distribution, and health food (Greeting) businesses.

A Hyundai Department Store Group official said, “Hyundai Green Food has expanded its business areas beyond its core food business into furniture, heavy equipment, travel, and selective welfare through various mergers and acquisitions (M&A), resulting in a mixed business structure that required management efficiency,” adding, “Through the spin-off and transition to a holding company, we plan to bifurcate into food and non-food businesses, pursuing management specialization and advancement by focusing capabilities on each business division.”