South Korea's leading food and animal feed producer CJ Corp. will establish a holding company in September to improve corporate governance, the company said in its regulatory filing Tuesday.
The board of directors approved a plan to split the corporation into a holding company and an operating one, effective on Sept. 1, CJ said, adding that the plan is also subject to the endorsement by CJ's shareholders on July 26.
Shareholders will get 63 shares of the holding company in exchange for 100 CJ shares, which tentatively retains the existing name CJ Corp., and 37 shares of the operating firm, tentatively named CJ Food, according to the filing.
"CJ has decided to restructure into a holding company system to enhance transparency in its corporate governance and to add shareholder value," the company said in the statement.
In the new structure, the holding company will focus on investment in food and media affiliates, including CJ Entertainment and CJ Home Shopping, while the operating company will have pharmaceutical and animal feed affiliates under its wing.
Subsidiaries of CJ Group will eliminate cross-shareholding over the next two years.
Both companies will be listed separately on the Korea Exchange, the company said.
CJ, formerly known as Cheil Jedang, was established in 1953 as a unit of Samsung Group, the nation's top family-run industrial conglomerate. In 1997, CJ, owned by Lee Jae-hyun, a grandson of the late Samsung founder Lee Byung-chull, formally split from Samsung.
CJ joins LG Corp. and SK Corp. in major family-owned conglomerates that shifted to a holding company structure.
Owners of South Korean conglomerates, called jaebeol in Korean, have been under pressure to improve transparency in their shareholding and management decisions as the nation plans to adopt international accounting standards by 2011.