South Korean bulk carrier operator Pan Ocean Co., a unit of the country’s leading poultry processor Harim Co., has acquired a minority stake in LS Corp. in a move seen by market watchers as bolstering construction-to-real-estate conglomerate Hoban Group in an escalating dispute between Hoban and LS Group.
According to a regulatory filing on Wednesday, Pan Ocean purchased 76,184 LS shares, representing 0.24% of the company, for 12.3 billion won ($8.9 million) on May 16, citing “pure investment” as the purpose.
The investment, however, has stirred speculation in Seoul’s dealmaking circles that Harim, the largest shareholder of Pan Ocean with a 54.72% stake, is positioning itself as a tactical ally, or white knight, for Hoban, which owns more than 3% of LS Corp.
“Harim’s relationship with Hoban against LS means they can operate in concert when interests align,” said an investment banker in Seoul.
Harim and Hoban have long maintained close ties; in 2023, Hoban lent support to Harim’s unsuccessful bid to acquire HMM Co., Korea’s largest shipping line.
FEUD BETWEEN HOBAN VS LS
Hoban has been building its shareholding in LS Corp. as it is locked in a legal and commercial battle with LS’s flagship cable subsidiary, LS Cable & System Co., over alleged patent infringement and technology leaks by Hoban-owned Taihan Cable & Solution Co.
LS won both the first and second rounds of the patent litigation, while a police investigation into the alleged theft of submarine cable know-how is nearing conclusion. Industry officials say the case could trigger multibillion-won damages claims.
Hoban is also increasing its stake in LS Corp. to gain governance leverage.
Under Korean corporate law, shareholders with at least 3% of a company’s voting rights can demand an extraordinary general meeting, propose directors or auditors for election, and request an inspection of the company’s accounting books.
The LS Group owner family’s dispersed shareholding structure – with key members owning between zero and 3% each – could also leave it vulnerable to activist pressure, including a potential offensive from Hoban, analysts said.
LS JOINS HANDS WITH HANJIN IN ANTI-HOBAN FRONT
In response, LS, which split from LG Group in 2003, has shored up defenses against Hoban by deepening ties with Hanjin Group, which owns Hanjin KAL Corp., the parent of Korean Air Lines Co.
Hanjin, the airline-to-logistics conglomerate, has its own history of boardroom conflict with Hoban, which became the second-largest shareholder of Hanjin KAL in 2022 by purchasing a 17.43% stake from activist fund KCGI. Hoban Group, through its subsidiaries, has increased its stake in Hajin to as high as 18.46%.
Hoban’s move at the time was seen as a threat to Hanjin Group Chairman Cho Won-tae’s management control of the airline group.
As a countermeasure, LS supported Hanjin with a 65 billion won exchangeable bond issue to strengthen their alliance against Hoban.
In May, Korean Air and LS Electric Co. agreed to cooperate in aerospace and defense technology development in a further alliance between Hanjin KAL and LS against Hoban.
By Gyeong-Jin Min
min@hankyung.com
In-Soo Nam edited this article.
