Key Takeaways:
A South Korean court is set to reconsider one of Asia’s largest divorce settlements, with a potential 1.56 trillion won ($1.1 billion) swing hanging on the valuation date of SK Group Chairman Chey Tae-won’s stake in the conglomerate.
"The size of the asset division could vary by trillions of won depending on which point in time is used as the price baseline," a legal source said, according to a ChosunBiz report.
The dispute centers on Chey’s 17.9% holding in SK Inc., the group’s parent company. His side argues the shares should be valued at 160,000 won, the price when the appellate court's arguments closed on April 16, 2024. Roh Soh-yeong, his ex-wife, argues for using the price at the end of the current remand trial, which recently stood at 503,000 won per share.
The case, which has added to share price volatility, puts a spotlight on governance and succession risks within South Korea's family-run chaebols. A large cash settlement could force Chey to liquidate holdings, potentially impacting his control over the country's second-largest conglomerate.
The second mediation session of the remand trial is scheduled for June 15 at the Seoul High Court. This follows a Supreme Court decision last October that overturned a staggering 1.38 trillion won appellate court ruling in favor of Roh. While the high court finalized the divorce itself and 2 billion won in damages, it sent the asset division portion back for recalculation.
The original appellate court had recognized Roh's "contribution" to SK Group's growth, partly based on 30 billion won in funds from her father, former President Roh Tae-woo. However, the Supreme Court deemed these funds illegal and thus not a valid contribution to be considered in the asset split. Roh's legal team has reportedly shifted strategy to emphasize her non-financial contributions during the marriage.
The financial stakes are immense. Chey holds 12,975,472 shares in SK Inc.
Applying the 35% partition ratio the appellate court previously granted Roh, the settlement would be approximately 727 billion won at the lower valuation, versus 2.28 trillion won at the higher price.
The stock's sharp appreciation has attracted significant foreign investment, with overseas buyers adding 584.6 billion won worth of SK shares this year. The company's stock has surged 102.3% year-to-date, lifting its foreign equity ratio from 26.93% to 29.78%.
The ongoing legal battle is a key variable for investors, as the final settlement could create a significant supply of SK Inc. shares on the market. The court must first decide if the shares are marital property at all, a point Chey contests, before determining the crucial valuation date and final partition ratio.
This article is for informational purposes only and does not constitute investment advice.
