From God’s greatest grace to any billionaire who fears for his economic empire, he will have one son who will inherit it. But the matter could become a major crisis if the billionaire has more than one son, especially if one's fist is not strong on the father's empire.
This scenario embodied in South Korea following the departure of billionaire Shin Kyuk-ho, who had transformed a small gum into the fifth largest economic empire in South Korea in six decades. Founded by Shin Keok-ho, the "Group Group" group works in the areas of hotels, shopping malls, cinemas and café chains.
It was not near the end of the founder of the group "Lot Group" secret, he died at the beginning of this week at the age of 97 years, after years of suffering from dementia. While the late billionaire involved his two sons in running the economic empire, he has never offered a successor, according to Bloomberg News.
To make matters even more difficult, the late billionaire did not leave a will, according to media reports in South Korea.
South Korean giant family economic groups tend to manage their investments with a ownership structure designed to reduce their capital obligations to the lowest possible level. While Hong Kong's emperors tend to hold between 40% and 50% of their economic empire shares, Korean billionaires often hold about half of the shares of their economic empires. This method can lead to problems when transferring power from father to sons, and investors often reap huge profits from the potential internal coup of power. The share price of "Lot Corp" rose last Monday, following the announcement of the death of its founder, by 20% during trading, before it concluded the transactions, up by 5.9%.
Things have become more difficult, with the traditional ownership structures of family businesses on the test side, Bloomberg said. The chairman of SK Group, the third largest economic group in South Korea, Shi Tae-won, may be removed from his position after his divorce from his wife, who filed a suit that could result in her obtaining a share of his shares in the group amounting to $ 1.2 billion Dollars. Although the man has yet to face a challenge to his authority, his brothers and younger sisters are beginning to talk about their desire to obtain their stakes in the group.
It can be said that this is the case also in the group "Lot Group", since five years ago Shin Dong Ju, the eldest son of the founder of the group, and Shin Dongbin, the youngest son, shared power in it due to the deterioration of the health status of the father. In July 2015, Dong Ju said that Chen ordered the dismissal of Dong Bin from the group's Board of Directors, Lotte Holdings of Japan.
It was precisely on that day that Dong Bin held a board meeting and stripped his father of the title of Chairman of LOT Holdings Japan. The value of the Japanese company under Dong-Bean fell by 45.8%, or about $ 1.5 billion of its value, according to the evaluation of the "CLSA Limited".
Now elder brother Dong Jo has little hope of regaining his authority over the Japanese company. Directly, through the companies he controls, Dong owns 21.2% of Lot Corp shares, according to estimates by Sanghyun Park, an analyst at Smartcarmarma.
In the event that Dong Ju inherited the shares of his late father and spent all his financial assets to buy the shares of Lot Corp, his share would not amount to more than 19.07% of the company’s shares. But this is not all for Dong Joo, there is what could be called the golden unemployment share of 11.1% of the shares of "Lot Corp", which is owned by the "Hotel Lot", which is controlled by "LOT OF JAPAN". The older brother could strengthen his control over the Japanese company, which is part of the group, by obtaining the workers share in it, which is estimated at 28% of its shares. This could put Ding Ju in a position to try to regain the Lotte Corp. throne.
But he will not be able to compete for the company's throne after his younger brother succeeds in raising a few additional shares within years.
Now, investors seem to be worried about the differences among the heirs of the South Korean economic giant. Therefore, the share of "Hanjin Cal Corp" group that includes many companies, including the South Korean airline, "Korea Airlines", is declining after the death of its chairman last April. Since his departure, his eldest daughter Heather Shaw, who was world famous for her disgraceful accident on a company’s plane in 2014, has criticized her brother, who is in charge of managing the family’s wealth. She has already met private investment fund officials to challenge her brother's control of the economic group.
With the South Korean economy faltering, there is a growing sense that President Moon Jae-in's plan to reform the family business system has lost its momentum. But with the inevitable death of the founders of familial empires, and the costly divorces of the wealthy and family struggles, the president may not need a "family empire sniper" to break up the highly complex structure of these empires.