South Korean conglomerate Hyosung Group is considering setting up a holding company in a bid to enhance independence of each of its sprawling business units and ensure smooth leadership succession to the family-run chaebol’s third generation.

According to industry insiders on Tuesday, Hyosung Group has embarked on the process to turn itself into a holding structure. The company has been rumored to seek transition into a holding structure, but it has not confirmed it before.

“The company is reviewing the plan (transition to a holding structure),” said an unnamed high-level official at Hyosung. “All options are on the table, but it is not easy to make a decision on how to break up the group because of the complexity of the business structure.”

The most likely scenario is demerging the group’s businesses into two investment entities, which would be holding companies, and seven operational units, including textile, industrial materials, chemical, heavy machinery, construction, trade and finance, according to sources. The reorganization would also be designed to give the two sons of Hyosung Group’s Honorary Chairman Cho Suck-rai more power over the group. The two holding entities are predicted to each come under the two sons. Cho Hyun-joon, chairman of Hyosung Corp., is expected to control his businesses under one of the holding companies while his younger brother President Cho Hyun-sang manages his companies under the other.

Hyosung is likely to stay under a single holding entity structure for the time being. Even after the transition, the heirs would focus on raising their stakes in the holding company to ensure stable control over the group, according to an industry expert. They will also discuss inheriting the 10.15 percent stake of their father Cho Suck-rai.

Cho Hyun-joon currently holds the majority stake in the company with 14.2 percent, while Cho Hyun-sang owns a 12.21 percent stake.

By Chung Seung-hwan and Yoon Jin-ho

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]