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BGF Retail to demerge into holding, operating entities

2017.06.09 13:59:01 | 2017.06.09 16:11:16
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BGF Retail Co., operator of Korea’s largest convenience store chain CU, announced Thursday a plan to split itself into separate holding and operating entities, surprising the market that has believed BGF’s transformation into a holding structure has little benefit to the company.

The Kospi-listed BGF Retail said in a regulatory filing after the Thursday’s market closing that it has decided to spin off its convenience store chain unit BGF Retail into an operating entity and merge other businesses under holding company BGF. The split ratio between holding company and operating company is 65:35.

The demerger plan requires approval in a shareholders’ meeting slated for Sept. 28 and the date for separation is set on Nov. 1. New share allocation is planned on Oct. 31 and they will be listed on Dec. 8.

BGF Retail said it has made the latest decision to maximize shareholder value and expected the new holding structure would allow it to further foster the growth of core businesses and make it easier to restructure the business structure.

As of end-March, BGF Retail’s convenience store business made up 97.4 percent of its total revenue and 96.8 percent of its total operating profit. Other businesses including advertising and golf resort operation would be under the control of the holding company BGF.

However, the market’s expectations for the company’s transformation into a holding structure are not high. As BGF Retail’s governance structure is simpler compared to other Korean conglomerates, it would barely benefit from changing into a holding structure, said Lee Joon-gi, analyst at Mirae Asset Daewoo Co. But he agreed that the firm’s spinoff of only convenience store chain unit into a new entity would help the company bolster its main cash-making business.

Shares of BGF Retail on Friday closed down 8.33 percent at 126,500 won ($112.6) from the previous session.

By Yoon Jin-ho and Lee Yong-gun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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