A Case Study of LG Chem’s Spin Off, a Turning Point in Corporate Restructuring in Korea

초록

Purpose: This paper examines corporate spin-offs in South Korea, focusing on how minority shareholder interests are affected when a parent company separates a high-growth business unit and subsequently takes the subsidiary public. The study introduces the institutional background governing corporate spin-offs in Korea, detailing the differences between equity spin-offs and subssidiary spin-offs, and explaining why the latter are more prone to shareholder value dilution in Korea. Design/methodology/approach: The study describes the case of the spin-off of LG Chem, a seminal event in the corporate restructuring landscape of Korea. Findings: By analyzing the LG Chem case, the study provides insight into how to implement subsidiary spin-offs without jeopardizing minority shareholder value. The study proposes a balanced approach between corporate autonomy and investor protection. Research limitations/implications: The present study is limited in its analysis to a single case. However, it provides multifaceted implications for corporate spin-offs and shareholder protection through the case analysis of a spin-off and the listing of the subsidiary. Originality/value: It identifies contentious issues that often arise during the process of spin-off restructuring and proposes pragmatic reforms to address them, such as granting shareholders both a buyback right and a preferential right to invest in the newly formed entity. The study further proposes the synchronization of these rights with the subsidiary's eventual listing date, thereby maintaining transparency and fairness.

키워드