LX Holdings, a holding company which was established in May by taking four non-electronics affiliates from LG group, said Tuesday that its Chairman Koo Bon-joon has sold his stake in LG Group to complete the spinoff procedure.

The company said Koo Bon-joon’s stake in LG Group has reduced to 2.04 percent from 7.72 percent. Together with his family’s stake, Koo’s total stake is now at 2.96 percent, meeting the prerequisite of the chief and relatives owning no more than 3 percent for the spinoff under the current law.

He sold his 4.18 percent stake in LG Group, worth 500 billion won ($423 million), to external investors through a block deal, in which the two parties agree to buy or sell shares at an agreed price among themselves prior to opening of the market. 

Koo Bon-joon is an uncle of current LG Group Chairman Koo Kwang-mo and a younger brother of late LG Group chief Koo Bon-moo.

Following the family tradition that the eldest son of the group’s chief inherits the management, the brothers of the chief have to create their own business group with spin-off companies when the chief passes away. LS Group, LIG Group and Heesung Group are examples of this tradition. 

For more than 70 years since the group was founded, LG had always smoothly completed the succession and separation of business between family members. 

The company said that Koo also purchased a 32.32 percent stake in LX Holdings from LG Group Chairman Koo Kwang-mo and eight other family members, becoming the largest shareholder of the holding firm with a 40.04 percent stake. 

Market estimates some 300 billion won have been cost for the stake trade. 

To follow the LG Founder Koo In-hoi’s community contribution values, Koo Bon-joon has donated his 1.5 percent stake in LG Group to three philanthropic foundations run by LG, according to the company.

LX Holdings said the company will apply for an official spinoff to the Korea Fair Trade Commission and expects to receive an approval in the first half of next year. 

According to Financial Supervisory Service, since LG Group’s LG Chemical and LG Display are doing business with LX Holdings’ LX Hausys and LX Semicon, the two companies must complete spinoff by no later than March. 

LX Holdings currently has LX International, LX Hausys, LX Pantos, LX Semicon and LX MMA under its wings.

On Tuesday, LG Group shares fell 7.3 percent to 80,500 won from the previous day. LX Holdings stocks inched down 0.5 percent to close at 10,100 won.