Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Hanjin, LS join forces amid conflicts with Hoban
Hanjin Group Chairman Cho Won-tae, front row fourth from left, and LS Group Chairman Koo Ja-eun, front row fifth from left, pose with other business leaders during a ceremony marking the 51st Commerce and Industry Day at 63 Convention Center in Seoul in this March 2024 photo. Joint Press Corps
By Park Jae-hyuk
Construction-to-media conglomerate holds stakes in both groups
The proverb "the enemy of my enemy is my friend" may describe the unexpected alliance between two opponents of Hoban Group — Hanjin Group, better known as the parent company of Korean Air, and LS Group, which specializes in cables, power equipment, metal and machinery.
Amid their ongoing disputes with the construction-to-media conglomerate, Hanjin and LS announced Monday that they signed a memorandum of understanding for the mutual growth and interests of their respective shareholders.
Hoban Construction, the group's flagship construction unit, has emerged as an antagonist of Hanjin Group Chairman Cho Won-tae following its acquisition of shares in Hanjin KAL — the group's holding firm — from KCGI and Pan Ocean. KCGI is an asset management company that backed Cho's younger sister, former Korean Air Vice President Cho Hyun-ah, also known by her English name Heather, when she attempted in 2020 to wrest control of the group from her brother.
As the second-largest shareholder of Hanjin KAL with a 17.9 percent stake, the construction firm rejected a proposal at last month's shareholders' meeting to raise the maximum annual compensation for directors to 12 billion won ($8.3 million) from 9 billion won. Hoban reportedly objected to "excessive" compensation for a "single director," presumed to be the Hanjin chairman.
Speculation persists that Hoban is still seeking to enter the aviation industry, given its 2015 attempt to acquire Kumho Industrial, then the parent company of Asiana Airlines.
However, Hoban has denied claims that its investment in Hanjin is intended to interfere with its management.
The company made similar remarks last month after it was revealed that Hoban had bought shares in LS Corp., LS Group's holding firm, amid patent disputes between LS Cable & System and Taihan Cable & Solution, a Hoban subsidiary.
Police launched an investigation into Taihan after LS alleged that its know-how for cable plant design had been leaked to its competitor through an architecture firm that had worked on factory designs for both cable makers. LS also defeated Taihan in a separate patent lawsuit over bus duct technologies.
Against this backdrop, the strategic partnership LS signed last month with LIG — another company founded by a descendant of the LG Group founder — has been interpreted as a move to counter Hoban.
However, Hanjin and LS said their recent partnership is unrelated to Hoban.
"Once Hanjin begins services related to urban air mobility, it will need infrastructure to power them," an LS Group official said. "Although we have yet to determine the specifics about our cooperation, we joined hands preemptively for the future."