This article was published on March 26, 2025, at 5:39 p.m. on the ChosunBiz MoneyMove website.
After Hoban Group revealed on the 12th that it holds equity in LS, various speculations about Hoban's true intentions have emerged in the market. Hoban maintains that it only purchased LS equity because the wire industry is a promising sector, but industry insiders believe that Hoban actually intends to shake the management rights of LS.
With LS drawing attention, Hanjin KAL, in which Hoban is the second largest shareholder, is also being highlighted. Recently, there have been concrete talks in the industry that Hoban will increase its equity in Hanjin KAL to engage in a management rights dispute and that it has been in contact with financial investors regarding this.
◇ 44 relatives share LS equity... many attractive assets
According to the investment bank (IB) industry on the 26th, Hoban Group recently purchased a portion of LS's equity, the parent company of LS Cable & System. Hoban Group explained that the equity rate is less than 3%. However, since the initial announcement of its equity holding on the 12th, there have been continuous orders for buying LS through other corporations, suggesting that further purchases are being speculated.
Hoban Group is distancing itself from suspicions that it purchased equity targeting LS's management rights, asserting that it only bought it for investment purposes, given the promising nature of the wire industry. In fact, both Hoban Group and LS own wire companies. Hoban Industry holds 42% of Taihan Cable & Solution, while LS has 92.3% of LS Cable & System.
Despite Hoban Group's explanation, the IB industry is offering a different interpretation. It suggests that this equity purchase is part of 'shaking LS Group's vulnerable governance structure.' LS, during the succession process, has more than 40 family members holding fragmented equity. Gu Ja-yeol, chairman of the LS board, holds 1.87%, Gu Ja-yeop, chairman of LS Cable & System, holds 1.46%, Gu Ja-cheol, chairman of Yesco, holds 1.94%, Gu Ja-yong, chairman of LS Networks and E1, holds 2.4%, Gu Ja-kyun, chairman of LS ELECTRIC, holds 1.85%, and Gu Ja-eun, chairman of LS Group, holds 3.63%, while the remaining relatives and the Songgang Foundation collectively hold 19%.
An industry insider noted, 'LS has an inherent weakness that could expose it to hostile M&As.' Although the Gu family's equity rate totals 32.13%, the numerous individuals holding small fragments of equity pose a constant risk of destabilizing management rights. Additionally, the company's treasury stock ratio stands at 15.07%, the National Pension Fund's equity rate is 12.06%, and the minority shareholders' equity rate is 45.62% as of the end of last year.
An industry insider explained, 'Moreover, LS has LS MnM as a wholly-owned subsidiary, allowing it to source quality copper from global copper mines, which could be an enticing asset for Hoban Group, which has Taihan Cable & Solution and Samsung Gold Exchange.' It is possible to produce gold from the by-products after extracting copper from copper ore. An IB expert emphasized that in an era where copper is becoming increasingly important, LS's network and information strength built over a long time collaborating with copper mines are also valuable intangible assets.
◇ Will Hoban shake Hanjin KAL's management rights... rumors of FI contact
The IB industry is watching the equity structure of Hanjin KAL as well as LS. Currently, Hoban Construction is the second largest shareholder, holding 17.9% equity in Hanjin KAL. In 2022, it purchased shares from the private equity fund KCGI, surpassing the shareholding percentage of Delta Air Lines (14.9%). Hoban Construction sold some shares of Hanjin KAL to Harim Group at the end of 2022, amid rising real estate crisis rumors, but later reacquired them.
An industry insider said, 'Hoban Group contacted multiple financial investors a few months ago to inquire about financing, and at that time, they were contemplating acquiring Hanjin KAL shares rather than LS.' However, the financial investors reportedly declined to get involved in the management rights dispute. Nevertheless, Hoban Group's public relations team denied any contacts with financial investors.
Hanjin KAL also does not have a strong governance structure. Chairman Cho Won-tae holds 5.78% equity, and his eldest daughter, Cho Seung-yeon (formerly Jo Hyun-ah), former vice president of Korean Air, holds 0.18%, while his younger daughter, Cho Hyun-min, CEO of Hanjin, holds 5.73%. Their mother, Lee Myung-hee, an advisor to Jeongseok Corporation, holds 2.09%. Although management rights remain unstable, Delta Air Lines (14.90%) and Korea Development Bank (10.58%) are classified as friendly shareholders.
In the past, conflicts between Chairman Cho and former Vice President Cho persisted until 2020, when Chairman Cho emerged victorious. An industry insider noted, 'If conflicts among these family members reoccur, it would not be impossible for Hoban to exploit the gap and shake the management rights.' This indicates that there remains the possibility of maintaining less than 20% equity and monitoring the situation before attempting to conduct open market purchases.