After Chairman Cho Seok-rae's Passing, Hyosung
Brothers Cho Hyun-joon and Cho Hyun-sang Declare Independent Management
Textiles and Industrial Materials Likely to Split into Two Groups
Chairman Cho Hyun-joon of Hyosung Group (left) and Vice Chairman Cho Hyun-sang of Hyosung Group (right).
Following the passing of Jo Seok-rae, Honorary Chairman of the Hyosung Group, the group's affiliate separation process is expected to accelerate. The textile division, which has been Hyosung Group's core business, will be led by the eldest son, Chairman Jo Hyun-joon, while the industrial materials division, developed as a new business, will be managed by the third son, Vice Chairman Jo Hyun-sang.
According to Hyosung Group on the 29th, Hyosung decided last month to establish a new holding company focused on advanced materials and appointed Vice Chairman Jo Hyun-sang to lead the management of this new holding company. This decision was resolved at the board meeting on the 23rd of last month. The plan involves a spin-off of the investment division related to six companies, including Hyosung Advanced Materials, Hyosung Information Systems (HIS), and Hyosung Toyota, to establish a new holding company tentatively named 'Hyosung New Holding Co., Ltd.' If the company split is approved at the extraordinary shareholders' meeting in June, from July 1, Hyosung Group will operate under a two-holding company system consisting of the existing company Hyosung and the newly established Hyosung New Holding.
After Honorary Chairman Jo Seok-rae stepped down from active management seven years ago, a system was established where eldest son Chairman Jo Hyun-joon and third son Vice Chairman Jo Hyun-sang each led their respective business operations. Due to age and health reasons, Honorary Chairman Jo Seok-rae retired as honorary chairman in 2017. At that time, Chairman Jo Hyun-joon was promoted from president to chairman after 10 years, and Vice Chairman Jo Hyun-sang was promoted from vice president to president after 5 years. Subsequently, Vice Chairman Jo Hyun-sang was promoted to vice chairman in 2021. Since then, Hyosung transitioned to a holding company system through a spin-off in 2018 to enhance governance transparency and management efficiency.
Hyosung was divided into four business companies alongside the holding company: Hyosung TNC for textiles and trading, Hyosung Heavy Industries for heavy industry and construction, Hyosung Advanced Materials for advanced industrial materials, and Hyosung Chemical for the chemical sector. Since then, Chairman Jo Hyun-joon has independently managed traditional business areas such as textiles, while Vice Chairman Jo Hyun-sang has independently managed the industrial materials sector.
As the affiliate separation process accelerates, attention is also focused on where the 10.14% stake in Hyosung held by Honorary Chairman Jo Seok-rae will go. Currently, Chairman Jo Hyun-joon holds 21.94% of Hyosung shares, and Vice Chairman Jo Hyun-sang holds 21.42%, which are similar proportions. Considering the trend toward independent management by the brothers, there is speculation that the shares will likely be distributed evenly rather than concentrated in one individual.
However, during the inheritance process, if the second son, former Vice President Jo Hyun-moon, demands shares, it could become a variable. Former Vice President Jo Hyun-moon sold all his company shares in 2014 and severed ties with the group, but later filed accusations against Chairman Jo Hyun-joon, alleging embezzlement and breach of trust.
Industry insiders expect that after the existing and new holding companies each form their own boards, Chairman Jo Hyun-joon and Vice Chairman Jo Hyun-sang will go through a process of settling their shareholdings, leading to a complete affiliate separation.
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