[Edaily Reporter SHIN MIN JOON ] #Shinsegae Co.,Ltd is accelerating the final stages of the spin-off involving siblings Chung Yong-jin and Chung Yu-kyung. Since establishing an independent management structure for the siblings in 2011, Shinsegae Co.,Ltd has been proceeding with the spin-off by dividing business areas and affiliates centered on E-MART Co., Ltd.(139480)and Shinsegae.

The final tasks in the spin-off process are considered to be the resolution of the intertwined business operations and shareholdings between E-MART Co., Ltd. and Shinsegae Co.,Ltd. in SSG.com, as well as the resolution of Shinsegae Co.,Ltd.’s stake in the Uijeongbu Station project. It is predicted that Shinsegae Co.,Ltd. will proceed with the spin-off by first resolving the stakes held by external financial investors (FIs) in SSG.com, then splitting the business into two through a demerger, and finally exchanging the shares held by E-MART Co.,Ltd. and Shinsegae Co.,Ltd.

SSG.com held a board meeting on the 27th and approved the spin-off of its lifestyle business division. Once the spin-off is complete, the surviving entity will be SSG.com, and the newly established entity will be renamed Shinsegae Co.,Ltd. Mall (tentative name). The effective date of the spin-off has been set for December 1.

The surviving entity, SSG.com, will focus on strengthening the competitiveness of its grocery-centered online shopping and existing e-commerce businesses. The newly established entity, Shinsegae Co.,Ltd., plans to evolve into a premium e-commerce platform centered on fashion, beauty, and lifestyle.

As this is a spin-off, the new entity’s ownership structure will mirror that of the surviving entity. Shinsegae Mall will launch with E-MART Co., Ltd. holding approximately 65% and Shinsegae Co.,Ltd. holding approximately 35%. Previously, on the 26th, E-MART Co., Ltd. and Shinsegae Co.,Ltd. completed the joint acquisition of the entire 30% stake in SSG.com held by Olympus First, an external financial investor (FI), for approximately 1.271 trillion won.

Consequently, E-MART Co., Ltd. and Shinsegae Co.,Ltd.’s respective ownership stakes in SSG.com have been finalized at 65% and 35%. With the exit of SSG.com’s external financial investor, the previously complex decision-making structure has also been simplified. Just one day after resolving the issue of SSG.com’s external financial investor stake, Shinsegae Group unveiled a business restructuring plan involving a spin-off.

The retail industry views this move as part of the process to separate the two sister companies. In particular, the fact that Shinsegae Co.,Ltd. opted for a spin-off involving the transfer of shares rather than an asset spin-off is interpreted as an effort to increase the efficiency and speed of the separation. In fact, even after the spin-off, E-MART Co.,Ltd. and Shinsegae Co.,Ltd. will remain joint shareholders of SG CO., LTD. and Shinsegae Mall. To facilitate the future separation of the business units, E-MART Co., Ltd. could acquire Shinsegae Co.,Ltd.’s stake in SSG.com, while Shinsegae Co.,Ltd. could receive E-MART Co.,Ltd.’s stake in Shinsegae Mall. This adds another option—a direct share swap—to the process, in addition to E-MART Co.,Ltd. and Shinsegae Co.,Ltd. buying and selling their respective stakes in SSG.com and Shinsegae Mall. However, specific plans have not yet been finalized.

E-MART Co., Ltd. and Shinsegae Co.,Ltd. have already invested approximately 1.271 trillion won to acquire the stakes held by financial investors in SSG.com. If E-MART Co., Ltd. and Shinsegae Co.,Ltd. were to purchase all of the other party’s SSG.com shares in cash to complete the spin-off, the additional financial burden could become significant. Consequently, the retail industry is leaning toward a plan in which E-MART Co., Ltd. and Shinsegae Co.,Ltd. would swap their respective stakes in SSG.com and Shinsegae Mall following the spin-off of SSG.com.

Apart from SSG.com, the only other group affiliate with intertwined business operations and shareholdings between E-MART Co., Ltd. and Shinsegae Co.,Ltd. is Shinsegae Uijeongbu Station. The major shareholders of Shinsegae Uijeongbu Station (as of June 1) are: △Shinsegae Co.,Ltd. (27.55%) △GwangjuShinsegae (25.0%) △Shinsegae Construction (19.9%). Shinsegae Construction is a wholly-owned subsidiary of E-MART Co., Ltd.

A Shinsegae Co.,Ltd. official stated, “This spin-off of SSG.com is a measure to strengthen expertise and competitiveness in each business segment,” adding, “SSG.com and Shinsegae Mall plan to focus on their respective core businesses while continuing to maintain customer touchpoints and necessary business synergies even after the spin-off.”