SSG.com, the e-commerce affiliate jointly owned by E-Mart, led by Shinsegae Group Chairman Chung Yong-jin, and Shinsegae, led by his younger sister and Shinsegae Chairman Chung Yoo-kyung, will be split into two companies. The move is expected to accelerate the separation of the siblings' business groups.
SSG.com said on the 27th that its board had approved a plan to spin off the company's lifestyle business. SSG.com, the surviving entity, will handle the existing e-commerce operations centered on online grocery shopping, while the newly created entity, tentatively named Shinsegae Mall, will take charge of the fashion, beauty and lifestyle businesses.
Once the spin-off is completed, E-Mart Mall and Shinsegae Mall — merged into a single company in 2019 — will be separated again after seven years. SSG.com was launched when E-Mart Mall, created by E-Mart through a spin-off of its online shopping business, absorbed Shinsegae Mall.
"Through this spin-off, we expect to strengthen the expertise of each business and respond more quickly to market changes based on an independent decision-making structure," an SSG.com official said. "Even after the split, we will maintain customer touchpoints and the necessary business linkages, and continue to reinforce our competitiveness."
The spin-off is seen as groundwork for separating the siblings' business groups within Shinsegae Group. Lee Myung-hee, the group's overall chairwoman, assigned the discount store business to her son, Chung Yong-jin, and the department store business to her daughter, Chung Yoo-kyung, starting in 2011. Since then, the group has effectively operated in the form of two holding companies, with each chairman running their own business areas independently. SSG.com, jointly owned by the two siblings, has been viewed as the key affiliate whose ownership structure needed to be untangled for the separation.
Ahead of the split, the stake held by an outside investor in SSG.com was also cleared. On the 26th, E-Mart and Shinsegae acquired a 30% stake in SSG.com held by Olympus Je-1cha, a financial investor in the company, for a combined 1.2711 trillion won (about $880 million). As a result, E-Mart's stake rose to 65.11% from 45.58%, while Shinsegae's stake increased to 34.89% from 24.42%.
When SSG.com is divided, E-Mart and Shinsegae will hold stakes in both the surviving and the newly created entity in line with their existing shareholdings. Market watchers say the ownership structure could later be sorted out through additional share swaps, so that E-Mart would own the grocery-focused SSG.com and Shinsegae would own the fashion, beauty and lifestyle-focused Shinsegae Mall. Because the new entity's business areas are closely tied to the department store business led by Chung Yoo-kyung, the separation of the siblings' groups is expected to enter its final stage once the shareholdings in the two companies are settled.
SSG.com plans to hold an extraordinary shareholder meeting in late October to approve the spin-off plan, with December 1 set as the effective date of the split.
