South Korean companies aggressive in spin-offs this year in recession

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South Korean companies are actively spinning off business units as part of preemptive restructuring and fundraising amid growing fears of an economic recession. meltdown.

Thirteen companies have announced spinoffs so far this year, according to the Financial Supervisory Service (FSC) on Sunday. This is the highest since 2010, when 14 companies split up their business units to convert them into primarily holding companies, again more than four times his three last year.

In particular, since September, when the country’s financial markets began to show signs of contraction, companies have been aggressive in breaking up subsidiaries, resulting in eight spin-offs.

There are two ways to split a company: spin-off and spin-off. Existing shareholders of the parent company typically receive shares in the split company on a pro-rata basis during spin-offs for business separations and holding company transformations. However, the parent company owns all shares of the split company after the split.

Samsung Securities researcher Yang Il-woo said companies have become more active in spin-offs this year as part of preventative restructuring and efforts to boost liquidity amid heightened economic uncertainty. .

Market analysts also noted companies seeking to tighten control rushed into divestitures, deferring capital gains and corporate taxes on shares acquired through holding company transformations until the sale of shares.

Some also suspect that more and more companies are choosing to split up their business units to avoid the corporate tax burden. The top corporate tax rate has risen to 25 percent from 22 percent under the Moon Jae-in administration.

Park Yoon Hye, Kim Jung Hwan, Lee Eun Joo

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