South Korean cosmetics powerhouse Amorepacific Group Inc. is giving signs of changing its succession plans as Suh Min-jung, Chairman Suh Kyung-bae’s eldest daughter who was known as the heir apparent, started a one-year leave earlier this month for undisclosed reasons after divesting of some affiliate stakes that could have funded the succession.
The chairman’s second daughter Suh Ho-jung, yet to come to front-line management, is emerging as a major candidate to be group successor as her holdings in Amorepacific are almost at the level of her elder sister’s, thanks to group shares that the chairman gifted to the second daughter in May.
Innisfree, a key affiliate of the cosmetics giant, said in its regulatory filing last Thursday that it bought 9.5%, or 23,222 corporate shares back from the Suh Kyung-bae Science Foundation, a nonprofit organization established by the chairman. The share buyback amounted to 55.6 billion won ($43.6 million), and Innisfree was valued at 586.1 billion won.
The eldest daughter donated the same percentage of Innisfree shares to the foundation in May, reducing her ownership in the mid-to-low-priced beauty products firm from 18.18% to 8.68% and changing her status from the second-largest shareholder to the third. As a result, the 9.5% stake in Innisfree, formerly held by the eldest daughter, was sold to the nonprofit foundation and repurchased by the unlisted company in two months.
Suh Min-jung, who previously held a 19.5% stake in each of the group affiliates Etude and Espoir, doesn’t own shares in the firms anymore. The shares she owned were bought back and canceled last September to improve the financial condition of the two firms.
The eldest daughter, who works for the luxury brand division at the group, is seen to have given up the opportunity to sell the equities and secure cash for the possible succession, banking sources say.
Born in 1991, she majored in economics at Cornell University and got an MBA from the Beijing-based Cheung Kong Graduate School of Business. She worked for global consulting giant Bain & Company and joined Amorepacific in 2019 to learn about the group's management in earnest.
Industry insiders say the eldest daughter’s management performance is not highly recognized by her father. She has led the rebranding of Innisfree since March of this year, but the cosmetics affiliate posted an 800 million won operating loss in the second quarter. The quarterly revenue fell 6.2% on-year to 67.5 billion won.
In comparison, Amorepacific group logged an 11.7 billion won operating profit in the April-June quarter, making a leap from a 10.9 billion won shortfall in the same period last year.
The chairman’s second daughter Suh Ho-jung is emerging as her four-year-older-sister’s competitor for the succession, industry sources say.
The chairman gifted 672,000 common shares and 1.7 convertible preferred stocks in Amorepacific to his younger daughter in May. If the preferred stocks are converted into common shares in a 10-year period, she will hold a total of 2.5 million shares, similar to her elder sister’s stake.
