E-mart acquires complete control over Shinsegae Property

Shinsegae has sold its stake in Shinsegae Property to E-mart, giving complete control of the group‘s business of shopping malls to the discount chain, according to the group Wednesday.

According to Shinsegae Group, Shinsegae sold its 1.7 million shares in Shinsegae Property, a 10 percent stake, to E-mart through a vote of the executive board Tuesday.

The shares were sold for 97.8 billion won ($86.9 million), with the transaction to go through on June 29.

Via the transaction, the supermarket chain now controls 100 percent of Shinsegae Property, which is responsible for Shinsegae’s large complex of malls such as Starfield Hanam, located just to the east of Seoul.

Industry watchers are seeing the move as a solidification of the specialties of Shinsegae Group‘s two heirs, Vice Chairman Chung Yong-jin and Shinsegae Department Store President Chung Yoo-kyung.

Last year, the two executives sold each other their shares in E-mart and Shinsegae to increase Chung Yong-jin’s stake in E-mart to 9.83 percent and Chung Yoo-kyung‘s stake in Shinsegae likewise to 9.83 percent.

With E-mart having complete control over Shinsegae Property, Chung Yoo-kyung will be stepping away from decisions about the group’s shopping mall projects while Chung Yong-jin will be overseeing E-mart and shopping malls.

The transaction was intended to “increase efficiency in management and decision-making by allowing sole management of complex shopping malls,” according to Shinsegae Group.

Starfield Goyang, a mega shopping mall to open in August in a northern suburb of Seoul, will be the first mall to open completely under the supervision of Vice Chairman Chung Yong-jin.

According to Shinsegae Group, the transaction does not signal a larger presence of E-mart’s specialty stores, such as electronics store Electromart, in future malls to be opened by the group.

“With a 90 percent stake, E-mart has had significant influence over decisions regarding Shinsegae’s shopping malls,” a spokesman for Shinsegae Group said. “This transfer of shares intends to make that control more concrete to increase efficiency.” 

By Won Ho-jung (hjwon@heraldcorp.com)