'Hydrogen Distribution' and 'Fuel Cell' Businesses... SK and Lotte Lead Large Conglomerates with the Most New Affiliates

[Asia Economy Reporter Eunju Lee] The number of subsidiaries affiliated with large conglomerates has decreased by five over the past three months. CJ, Hanwha, and Kakao saw the largest reductions in the number of subsidiaries. Mergers and acquisitions within and between corporate groups were actively carried out to focus on core business areas.

According to the "Status of Changes in Large Conglomerate Affiliates from November 2022 to January 2023" announced by the Fair Trade Commission on the 8th, the number of subsidiaries under 76 large conglomerates stood at 2,882 as of the end of last month. This is five fewer than the 2,887 subsidiaries recorded at the end of October last year, three months prior. As a result of company establishments and equity acquisitions, 61 companies were newly included as affiliates, while 66 companies were excluded due to mergers and acquisitions and equity sales.

The conglomerate with the most excluded subsidiaries was CJ (8 companies). This was followed by Hanwha (7 companies), Kakao (6 companies), and Bando Holdings (6 companies). During the same period, the conglomerate with the most newly included subsidiaries was SK (8 companies), followed by Lotte (6 companies).

Mergers and acquisitions of business affiliates within and outside corporate groups to focus on core business areas were prominent. CJ merged eight of its content production companies (such as Moho Film and Eggs Is Coming) into CJ ENM Studios, a content production company within the same corporate group. Hanwha merged four companies, including the solar power company Haesarang Solar, into another of its affiliates, Highpass Solar. KT’s OTT service KT Season was merged into Tving, a similar business under CJ.

Meanwhile, company establishments and equity acquisitions to strengthen new business momentum in the hydrogen and automotive sectors were also active. SK and Lotte jointly invested 50% each to establish Lotte SK Eneroot, a hydrogen distribution and sales company, and also established two subsidiaries, including Ulsan Eneroot 1, a fuel cell power generation company. LG acquired shares in Apple Mango, an electric vehicle charging company, and GS acquired shares in Chargebee, another electric vehicle charging company, incorporating them as affiliates. POSCO Holdings, under POSCO, established POSCO Lithium Solutions, a producer of electric vehicle battery materials.

There were also attempts to improve management efficiency through business structure reorganization within large conglomerates. Hanwha spun off its defense division to create Hanwha Defense, and Hanwha Solutions spun off its advanced materials division to establish Hanwha Advanced Materials. Harim split its subsidiary NS Shopping from Harim Holdings to create NS Holdings and then merged NS Holdings back into Harim Holdings.