Eugene Group Expands Beyond Ready-Mixed Concrete and Construction Materials
Aims to Become a Comprehensive Media Group Through YTN Acquisition
Demonstrates Strong Commitment With a Winning Bid of 319.93 Billion Won
High Likelihood of Appeal
The court's decision to revoke the approval by the Korea Communications Commission (now the Broadcasting and Media Communications Commission) for the change of YTN's largest shareholder has put a halt to Eugene Group's plans to become a "comprehensive media group." As an intervening party in the lawsuit, Eugene Group is considering actively filing an appeal, as it is entitled to do so independently.
According to industry sources on December 2, Eugene Group plans to decide whether to appeal after reviewing the court's written judgment. On November 28, the Seoul Administrative Court's Administrative Division 3 (Presiding Judge Choi Sujin) ruled in favor of the plaintiff in the first trial of the lawsuit filed by the YTN Employee Stock Ownership Association seeking to cancel the approval for the change of the largest shareholder by the Korea Communications Commission. The court found that the decision was procedurally unlawful because it was made by only two members-Chairman Kim Hongil and Vice Chairman Lee Sangin, both appointed by former President Yoon-rather than the full five-member panel.
The court stated, "It is preferable for major decisions by the defendant (the Korea Communications Commission) to be made with all five members appointed and present, requiring the approval of at least three. Even if, due to unavoidable circumstances, fewer than five members are present, for the defendant to function as a collegial body in substance, decisions should at least be made with three or more members present."
As a result of this ruling, Eugene Group's acquisition of a large-scale company for 319.9 billion won is now at risk of falling through. Eugene Group has steadily expanded its business into finance, distribution, logistics, and entertainment, with its core affiliate, Eugene Corporation, which specializes in ready-mixed concrete and construction materials. This move was based on the assessment that new business ventures were needed to overcome sluggishness in its main ready-mixed concrete manufacturing business, which has suffered due to a downturn in the construction sector.
The acquisition of YTN is seen as part of this background. In the late 1990s, Eugene Group acquired Dream City Broadcasting, a comprehensive cable operator in Bucheon, Gimpo, and Eunpyeong, Seoul, achieving an operating margin of over 30% as a cable broadcaster. Leveraging its previous experience of focusing on media as a core business, the group sought to find new opportunities in the content industry. Eugene Group demonstrated a strong commitment to acquiring YTN by bidding 319.93 billion won-higher than YTN's then-market capitalization of 252 billion won-for a 30.95% stake held by KEPCO KDN and the Korea Racing Authority. The group later explained that the acquisition was "a strategic decision reflecting YTN's potential for growth and the intention to expand into the content industry as a comprehensive media group."
Looking ahead, it is highly likely that Eugene Group will pursue an appeal independently, regardless of the Broadcasting and Media Communications Commission's actions. With Justice Minister Jeong Seongho currently directing the government to forgo appeals in lawsuits related to the previous administration’s Korea Communications Commission decisions, the likelihood of the commission itself appealing is low. For Eugene Group, this means it can maximize its chances by contesting the legal issues once more in the appellate court and, if unsuccessful, seeking a re-deliberation from the commission. However, industry observers are not optimistic about the outcomes of either the appellate trial or any subsequent re-deliberation by the commission.
An industry insider commented, "Even if this ruling is finalized as is, Eugene Group's share ownership will not be invalidated, nor will its status as the largest shareholder change. However, there will be restrictions on exercising its controlling rights, such as voting rights. Given the current administration's stance, the general consensus is that even if Eugene Group applies for a re-deliberation on the change of the largest shareholder after the commission is fully formed, it is highly likely to be rejected."
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