Iljin Global, a South Korean automotive parts conglomerate, completed a pivotal 264 billion won share transaction in 2012 that established the succession framework for second-generation chairman Lee Dong-seop. Iljin Co., the group's core subsidiary where Lee had become largest shareholder in 2006, purchased a 30% stake in Iljin Global from founder Lee Sang-il at 2.94 million won per share. The transaction created a control structure of Lee Dong-seop → Iljin Co. → Iljin Global, enabling the founder's eldest son to expand his grip over the group's flagship bearing manufacturer. The staged succession process began in 2006 when Lee Dong-seop, then 35, assumed the largest shareholder position in Iljin Co., and continued through a 2019 corporate split that separated Iljin Global's investment and real estate operations from its bearing business.
Iljin Co. Purchases 30% Iljin Global Stake for 264 Billion Won in 2012
In 2012, Iljin Co. acquired a 30% stake in Iljin Global for 264 billion won, at 2.94 million won per share with a par value of 10,000 won. At the time, founder Lee Sang-il and one special related party owned 100% of Iljin Global's shares. The transaction occurred as Lee Dong-seop assumed the CEO position at Iljin Global in February 2012, six years after becoming Iljin Co.'s largest shareholder.
Iljin Co., established in January 1986 as Donga Industrial, produces automotive chassis components including ball joints, stabilizer bar links, and door checkers. The company operates its headquarters and factory in Gyeongju, North Gyeongsang Province, with five manufacturing and sales subsidiaries in India, Slovakia, the United States, and China.
To finance the share purchase, Iljin Co. borrowed from banks, increasing its short- and long-term borrowings from 22.5 billion won in 2011 to 147 billion won in 2012 on a standalone basis. Lee Dong-seop had joined Iljin Global's board in February 2003, followed by positions at Iljin Bearing (auditor, May 2005) and Iljin Co. board (October 2005) before becoming Iljin Co. CEO in February 2006.
Iljin Co. Repays Acquisition Debt by 2016 Through Operating Profits
Iljin Co. fully repaid the acquisition debt by 2016, four years after the transaction. The company generated 116 billion won in operating profit on a standalone basis during the five-year period from 2012 to 2016. Iljin Co. recorded consolidated sales of 974 billion won last year, with average annual operating profit of 33.6 billion won over the five years from 2021.
Dividend income from Iljin Global increased significantly after Iljin Co. became a shareholder. Iljin Global had paid 3 billion won in annual dividends from 2009 to 2012, but expanded distributions to 6 billion won in 2013, 9 billion won in 2014, 33 billion won in 2015, and 60 billion won in 2016. During this four-year period, Iljin Global's standalone operating profit averaged 110 billion won annually. Iljin Co. collected a total of 33.3 billion won in dividends from its Iljin Global stake during these years.
Iljin Global recorded annual sales of 1.91 trillion won last year. The company specializes in third-generation wheel bearings and has emerged as the group's flagship entity, surpassing Iljin Co. in prominence following rapid growth that began in 2009.
Iljin Global Splits into Holdings and Operating Companies in 2019
In July 2019, Iljin Global underwent a spin-off, separating into Iljin Global Holdings (formerly Iljin Enterprise, the surviving entity) for investment and real estate operations, and a newly established Iljin Global for the bearing business. The split allocated 74% of value to the holdings company and 24% to the operating company. At the time of the split, founder Lee Sang-il held 60%, Iljin Co. held 30%, and chairman Lee Dong-seop held 10% of the shares in both entities.
In March 2020, Iljin Global repurchased and canceled 13.5% of its shares for 50 billion won at 4.69 million won per share with a par value of 10,000 won. The three shareholders received cash proportional to their ownership stakes: Lee Sang-il received 30 billion won and Lee Dong-seop received 5 billion won, while maintaining their remaining stakes in Iljin Global.
The succession structure established Lee Dong-seop's control through a 40% combined ownership stake (30% from the 2012 transaction plus 10% direct holding) in both Iljin Global Holdings and Iljin Global via Iljin Co. Founder Lee Sang-il passed away in June 2023 at age 85, during the company's 50th anniversary year. At that time, the group's core subsidiaries removed the founder's name from representative positions, though the transfer of shares to the second generation remained incomplete.
FAQ
What did Iljin Co. purchase in 2012?
In 2012, Iljin Co. purchased a 30% stake in Iljin Global for 264 billion won at 2.94 million won per share. The transaction established a control structure enabling Lee Dong-seop to expand his ownership over the group's flagship bearing manufacturer through his position as Iljin Co.'s largest shareholder.
How did Iljin Co. finance the 264 billion won share purchase?
Iljin Co. borrowed from banks to finance the acquisition, increasing its short- and long-term debt from 22.5 billion won in 2011 to 147 billion won in 2012. The company fully repaid this debt by 2016 using operating profits and dividend income from its new Iljin Global stake.
What happened to Iljin Global in 2019?
In July 2019, Iljin Global split into two entities: Iljin Global Holdings (the surviving company handling investment and real estate) and a newly established Iljin Global (for bearing operations). The split allocated 74% of value to the holdings company and 24% to the operating company, with founder Lee Sang-il, Iljin Co., and Lee Dong-seop maintaining proportional stakes in both entities.
