Kolon Global to spin off auto unit, eyes Kolon Mobility IPO in 2023

With the separation, Kolon expects to improve management efficiency and enhance shareholder value

Kolon Mobility, a spin-off of Kolon Global

Ik-Hwan Kim 2

2022-07-21 11:17:24 lovepen@hankyung.com

Corporate restructuring

Kolon Global Corp., an affiliate of South Korean conglomerate Kolon, will spin off its car import business unit to improve management efficiency and enhance shareholder value.

Kolon Global, which has a presence in various business sectors, including construction, trade, leisure and foreign car imports, will spin off Kolon Mobility as a separate entity as of Jan.1, 2023, the company said in a regulatory filing on Wednesday.

Kolon Global, as a remaining entity, will retain businesses such as Kolon E&C Inc., Kolon Sporex and a trading unit, while placing all automobile-related businesses, including Kolon Motors, an official dealer of BMW Group Korea, under Kolon Mobility.

The group takes the spin-off method, which requires listings of both the existing company and the new entity.

Kolon Global engages in various businesses, including construction, trade, leisure and car imports

In a spin-off, the parent company distributes shares of the new subsidiary to its existing shareholders on a pro-rata basis.

A split-off, another demerger method, saves a parent from handing out shares of the separated offspring to the existing shareholders, which sometimes could result in a deterioration of the parent firm’s share value without the separated growth business.

SHARES SURGE FOLLOWING ANNOUNCEMENT

“With the spin-off of Kolon Mobility, we expect to better cope with changing business conditions and enhance our shareholder value,” said a Kolon Global official.

Following the announcement, shares of Kolon Global surged to close 13.5% higher at 18,100 won on Wednesday. In early Thursday trade, the stock rose 9.1% at 19,750 won, outperforming the broader Kospi index’s 0.3% gain.

Kolon Group's One & Only Tower_renewable energy

Kolon Global and Kolon Mobility will be divided at a ratio of 0.75 to 0.25. With the split, Kolon Mobility will be listed on the Korea Exchange.

Kolon Mobility also handles imports of other foreign vehicles such as Audi, Volvo, Jeep and Rolls-Royce.

The new entity will be jointly led by Lee Kyu-ho, the eldest son of Kolon Group Chairman Lee Woong-yeol, and Jun Chul-won, Kolon Global’s vice president, who previously led the BMW car import business.

The group said Kolon Mobility will aim to achieve 100 billion won ($76 million) in annual operating profit on sales of 3.6 trillion won by 2025.

Write to Ik-Hwan Kim at lovepen@hankyung.com
In-Soo Nam edited this article.