이 기사는 2022년 02월 25일 08:07 thebell 에 표출된 기사입니다.

South Korea’s Shinsegae Group is stepping up efforts to boost shareholder returns with stock splits and increased dividend payments, with the family-controlled conglomerate’s succession planning coming to an end.

Three companies under the retail conglomerate announced plans for stock splits on Tuesday. Shinsegae Information & Communication will split shares 10-for-1, giving shareholders nine more shares for every one held. Shinsegae International and Gwangju Shinsegae will split 5-for-1.

The splits are subject to shareholder approval, which the companies will seek at their annual general meetings in March. If approved, trading will begin on a split-adjusted basis on April 11.

The companies said in regulatory filings that the decisions are aimed at making their stocks more affordable for individual investors and increasing the liquidity of trading in their shares. After stock splits, Shinsegae I&C, Shinsegae International and Gwangju Shinsegae will have 17.2 million, 35.7 million and eight million outstanding shares respectively.

What these three companies have in common is that their stocks have been used to help fund gift taxes imposed on the conglomerate’s heirs Chung Yong-jin and Chung Yoo-kyung, leading to significant changes in the companies' ownership structures.

In July 2018, Chung Yong-jin, Shinsegae Group vice chairman, and his father Chung Jae-eun offloaded their entire 114,170 shares (6.98%) in Shinsegae I&C to Emart, the conglomerate’s supermarket chain, to free up cash. The sale also coincided with the authorities’ tightened scrutiny of intercompany transactions within a family-controlled business group.

Chung Yong-jin also sold his entire 833,330 shares (52.08%) in Gwangju Shinsegae to Shinsegae Inc in September 2021, with the sale proceeds used to fund a gift tax bill. Gwangju Shinsegae has long been ragged on by shareholders, including the National Pension Service, for low dividend payouts.

Shinsegae International shares held by Chung Yoo-kyung were also used to pay gift taxes. She was gifted 1.5 million shares in the fashion company, worth about 190 billion won ($158 million), from her father in 2018, and cashed out a total of 93.1 billion won in 2018 and 2019.

Shinsegae Group is expected to continue to increase shareholder returns. Earlier this month, all of the three companies announced dividends that increased significantly from a year earlier thanks to strong earnings results. Especially, Gwangju Shinsegae’s dividend for 2021 more than doubled to 8,500 won per share from 3,500 won per share a year ago.

“The stock price could be affected by an increase in the number of outstanding shares for some time, but we believe stock splits will increase trading liquidity and help lift the stock price in the mid to long-term,” an official at Shinsegae Group said. (Reporting by Geul-ah Bang)