Chapter 35
Translator: Dreamscribe
“What on earth is going on?! Dismissed all of a sudden?!”
The news hit like a bolt from the blue, so much so that Chairman Oh Dong-Yeong, who had been bedridden due to old age, jumped up.
“It seems that Oh Jae-hyun pulled some strings. He persuaded the shareholders of LK Orient to hold a board meeting and pushed a vote through with a majority.”
As a result, in just one morning, Chairman Oh Dong-Yeong and his eldest son were ousted from the core holding company of the LK Group.
“What the hell is that bastard doing...!”
Even before this, the second son, Oh Jae-hyun, had been solely focused on business in Japan and had even settled down there for a while.
At the time, it was thought that he was simply devoted to his work, but in reality, he had been sharpening a knife to stab his own father and brother in the back.
“Why did the shareholders side with the second son? Weren’t they all friendly shares loyal to me?”
LK Orient was a company that Chairman Oh Dong-Yeong had established early on to secure solid control.
He had filled it with shareholders who would back him no matter the circumstances.
Some shares were even held by LK executives, and those shares, according to the rules, could not be sold and had to be relinquished immediately upon resignation. They were perfectly friendly shares.
“Yes. But even those executives sided with Oh Jae-hyun. As did the other shareholders of LK Orient. It seems likely that he had been working behind the scenes for a long time, turning their hearts without the chairman knowing.”
“Those insolent bastards dare-.”
Chairman Oh Dong-Yeong trembled with rage.
This was clearly a coup d’état.
It was a direct defiance of the will of the father and of the chairman of the group.
“That bastard Jae-hyun, he lived his whole life like he had no ambition. And now he’s been plotting something this shady behind our backs?”
"He was born a man, and moreover born of your bloodline, Chairman, it would be a lie to say he had no ambition. He just hid it well enough not to get caught until now."
Chairman Oh Dong-Yeong clutched his throbbing head.
First, he had to put out the immediate fire.
“General Manager Yang. We can turn this around, right?”
"If you step forward directly, Chairman, it's possible. If you drop a stern order, the shares that sided with Oh Jae-hyun will likely return to your side. But I can’t guarantee they’ll all come back.”
“Why not?”
"Because suddenly holding a board meeting to dismiss someone is essentially a declaration of war. Oh Jae-hyun surely knew that once you got involved, the controlling shares would be divided.”
“So that means he secured enough control to go head-to-head with me in a share battle?”
“Yes. He wouldn’t have pulled this off otherwise. But we’ll only know for sure once everything is thoroughly assessed.”
Chairman Oh Dong-Yeong had handed over all management authority to his eldest son, the Vice Chairman, and had stepped back from the front lines like a retired king, simply watching from the sidelines.
He had been waiting for the right moment to formally pass down the chairman title, but then this incident exploded.
And the main reason for the loss of friendly shares was also because Chairman Oh had withdrawn to the inner quarters.
“Call everyone. No, I’ll do it myself.”
“Are you sure? Your health is not well...”
“My son thinks he can overturn my will just because I’m an old tiger with no teeth? You think I’ll just sit and watch? Before I die, I’ll fix his damn attitude one last time.”
Lately, there had been a constant dullness in his eyes, but now, like in his prime, a spark had returned to Chairman Oh’s gaze.
Though he was in an aged body, he was still a born fighter whose blood boiled in the face of a battle.
The problem was, his opponent was his own son.
***
The Dieselgate scandal was a shocking event that affected not only the entire world but also South Korea.
But now, there was no mention of Dieselgate in any news outlet.
[Chairman Oh Dong-Yeong has regained control of the shares in LK Orient, officially igniting the battle for management rights.]
[Due to what’s being called the “War of Princes” within the LK Group, LK Group-related stock prices are currently fluctuating. LK Group has promised to quell the turmoil as soon as possible to prevent further market impact.]
All the news was filled with stories about the LK Group.
The succession process of the group, which had seemed like it would end smoothly, was suddenly thrown into chaos when the second son, Oh Jae-hyun, rose up and triggered a management rights battle.
After all, isn’t watching a fight supposed to be the most entertaining spectacle in the world?
And this wasn’t just any fight, it was a fight over the chairmanship of a major group.
The second son striking his father and older brother from behind?
For third parties, it was a dopamine party.
“But the stock price isn’t shaking as much as expected.”
“Usually, a management rights battle is a huge boon in the stock market.”
In the Korean stock market, a favorable factor differs in nature from those in overseas markets.
Typically, overseas markets assess a company’s growth potential, and if the company performs well, the stock price inevitably rises.
But in Korea, even if earnings are strong, the price often stays stuck in a box range.
Even if something is developed, it remains boxed in.
So what raises Korean stocks?
It’s precisely these kinds of management rights battles.
A management rights fight means that parties are urgently moving to secure shares.
Naturally, this leads to the purchase of available shares on the market, which raises the price, an ironic benefit for shareholders.
In the U.S., unless there’s a hostile M&A or an activist hedge fund involved, such share-based management rights battles are rare, and in Japan, management and ownership are clearly separated, so such cases are almost nonexistent.
“It’s like a special event you can only see in Korea.”
“It looks like a mess, but it’s a market that’s fun in its own way.”
However, this LK Group management rights battle wasn’t taking place on the KOSPI.
“LK Group’s governance structure is based in Japan, not Korea. And above all, it’s all unlisted companies, right? If it’s not an over-the-counter deal, there’s no way to get shares, so everyone’s just sitting around sucking their thumbs.”
As a result, criticism was pouring in.
Currently, LK Group shares traded domestically are completely useless in this succession battle.
Only shares of LK Orient matter.
Most people didn’t even know that LK Group originated in Japan and that its holding company is still based there, so when they heard about the succession fight, they hastily bought LK Group stock, only to get burned.
“The group’s circular shareholding structure is so complex that ordinary people couldn’t possibly know. Even people working in securities firms probably had no idea.”
It’s not for nothing that this company is known to have the most complex circular shareholding structure in Korea.
“But… how much do you think they’ll try to buy our shares for?”
The reason we were discussing LK Group in the conference room right now was precisely this.
The 300 billion won worth of shares JK Holdings sold to us.
Under normal circumstances, they’d be completely useless, just money tied up in a worthless stake. But now that they’re part of the key holding company in a management rights battle, their value has risen.
“Hmm. Typically, when a management fight breaks out, shares are bought at a 20% premium. In KOSPI history, there was even a case where they paid up to 50% more.”
“Wow. If we bought it for 300 billion and they pay 50% more… that’s a 150 billion profit, just sitting there.”
“Whew. This is why it’s so important to think several moves ahead. Department Head, you bought these shares through an over-the-counter deal because you anticipated that Oh Jae-hyun would launch this ‘war of princes,’ right?”
Following the hunch that started at LK Tower, we kept chasing the trail until, before we knew it, we’d ended up joining the noisiest management battle in Korea today involving LK Group.
Well, to be precise, it would be correct to say we're maintaining neutrality.
“But there’s still no word from their side.”
“Their governance structure is so tangled that they might just be going through confirmation procedures.”
“What if they just completely pass over our shares?”
“That’s… not entirely impossible. The outcome might be decided without needing our stake.”
If that happens, we’ll end up like a dog chasing chickens.
Even if we try to sell the shares again, no one will take them willingly.
“Let’s just wait for now.”
Like a patient fisherman, all we can do is quietly wait until someone bites the bait.
Besides, wasn’t it my gut feeling that strongly pushed me to acquire these shares?
‘But what if they really do pass over us?’
Then that 300 billion will be forcibly locked up in LK Group forever.
Until the next generation fights over the management rights.
***
“Vice President, what the hell is going on all of a sudden? Why is everyone so desperate to meet me?”
CEO Hwang Dae-woon was dumbfounded by the flood of meeting requests pouring in from all directions.
The one that stood out the most was LK Group.
“Didn’t the second son cause chaos by launching a full-scale rebellion within LK Group?”
“Yeah, he did.”
“If you want to fight for control of LK Group, it has to be done in Japan, not Korea. The problem is that everything there is unlisted, so outsiders don’t even have a chance to get involved. According to the information, the forces supporting Chairman Oh Dong-Yeong and Oh Jae-hyun are currently split almost evenly.”
Chairman Oh Dong-Yeong may be old, but still.
To think it had come to such a precarious situation with his second son.
“While Oh Jae-hyun did a good job rallying shareholders, a big reason also seems to be that Vice Chairman Oh Seung-hyeon’s management abilities are in doubt. Even if the shares were once friendly toward Chairman Oh Dong-Yeong, that was decades ago. Plus, since part of LK Group’s income is now flowing into Orient, they probably want higher dividends.”
“So?”
“There are multiple companies mixed into LK Orient, and among them is one called JK Holdings. It’s an investment firm operating in Japan. Do you know what their main stock was?”
“Of course not.”
“Europe. Specifically, Stummwagen.”
“Ah-.”
In that case, they must’ve suffered massive losses from this recent crisis.
“On top of that, they had long positions in Stummwagen and shorted its competitor car companies. The losses were so bad that they even received a margin call. So once the liquidity crunch started, they began liquidating everything, and one of the things they dumped was their stake in the industrial holding company.”
“If you mean the industrial holding company...”
“It’s a force that holds a pretty significant stake in LK Orient. It’s an unlisted company made up entirely of friendly shares to secure solid control by the first chairman. They put 17% of it on the OTC market. If you convert that to LK Orient’s total shares, it accounts for 5% of the controlling shares.”
Five percent of the controlling shares.
Ordinarily, that would be a negligible amount.
But in a management rights battle, that 5% becomes a huge game changer.
“And as I said earlier, the control ratio between Chairman Oh Dong-Yeong and Oh Jae-hyun is currently about even.”
“Then that 5% acts as the casting vote?”
“Yes. And that 5% is currently in our company’s hands.”
“...What?”
CEO Hwang Dae-woon blinked.
How did that 5% end up with our company?
Then something flashed through his mind.
"Wait. Didn't Jin-ho spend 300 billion in over-the-counter trading last time? Don't tell me that was it?"
Normally, when a company conducts a multi-hundred-billion won transaction, each department has to go through an approval process.
To determine whether it’s truly a sound investment and whether risk management is solid.
The final approval always lies with the CEO.
But there were no such complicated middle steps in Jung Jin-ho’s department.
If Jung Jin-ho wanted to, he could conduct any transaction entirely at his own discretion.
It was an extraordinary authority not found in any other securities firm.
So CEO Hwang only received brief reports on whatever Jin-ho invested in.
The deeper he looked into it, the more anxious he’d get about the risks, and he didn’t want to speak carelessly out of nervous overthinking.
And now, Jung Jin-ho held the casting vote in the battle to decide the next chairman of LK Group.
“.......”
Suddenly, his throat went dry, and he gulped down water.
Could this all be Jin-ho’s grand plan?
He shorted Stummwagen to drive the price endlessly down, forcing JK Holdings to cough up their shares. Then, before the war of princes erupted, he quietly secured those shares and now holds the casting vote.
“Isn’t it too perfect to be a coincidence?”
“Whew. This is exactly why I never tried to dig into Jin-ho’s investments too much. It’s enough to give a man heart palpitations.”
That was why all the meeting requests were coming in.
Not just from LK Group, but even from other funds.
“That 5% really is the casting vote?”
“So far, yes. But if we quote an unreasonable price, both sides may choose to bypass the stake altogether. They wouldn’t want to burn all their bullets just to get 5%.”
According to CEO Hwang Dae-woon, the highest price ever publicly disclosed for a stake sold during a management rights battle had been at a 50% premium.
“What should we do?”
“What do you mean what? Jin-ho’s the one who bought it. So the decision is his to make. Decline all the meeting requests.”
At this point, it was no longer a game Hwang could interfere in.
There was just one thing he was curious about.
‘How much is Jin-ho planning to sell it for?’
***
Though the management rights battle was in full swing, we hadn’t heard a single word from either side, and I started to wonder if we were really going to be passed over like this.
I even thought maybe the game was already over and they were just preparing the press release.
But as they gathered the various tangled shares, they seemed to have realized it a bit too late.
That the 5% we were holding would decide the outcome of this battle.
“But if we mess up the tug-of-war, we might still get passed over...”
While securing shares is crucial in a management rights fight, once things cross a line, both sides are more likely to negotiate with each other and choose to bypass rather than fatten up the other party.
There have actually been cases where someone got greedy, got passed over, and ended up taking a loss.
That meant my role was to find the right price.
If you buy something, you’ve got to sell it to realize the profit.
“...30%?”
I threw out a slightly high number.
No reaction.
“40%?”
I wrote down 40 next to it, but still no response.
So I gradually raised the numbers.
50, 70, 90...
“Still no feeling?”
Was I quoting too high a price?
Or did I need a more precise figure?
“All right, let’s keep going.”
Yeah. I’m just writing this down for myself anyway.
Might as well jot down whatever I want.
So I kept increasing the figure.
“......!”
But surprisingly, the pen stopped at one number.
And from that moment, the tingling sensation rising up through me told me.
This was the fair price for the 5% stake.
For a moment, I couldn’t believe my eyes.
“Three times?”
900 billion for just 5%?
*****
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