FILA Holdings Inc.

FILA Korea is gearing up to become a global player with its plan to split itself in two.

The sportswear company announced on October 2 that it will split itself into two companies. The remaining entity will be turned to an intermediate holding company and called FILA Holdings, while the newly incorporated subsidiary, FILA Korea, will function as a business unit, staying unlisted.

FILA Korea is expecting that the split would help to enhance the company's management efficiency. It was two years ago that the firm was first split into a holding company and an operating company. However, the current structure has been deemed to have a room for improvement, with the holding company having a foot in both camps.

The planned split-up could create a clear separation between roles of the holding company and its business unit FILA Korea, enabling it to solely focus on apparel business and market expansion activities.

FILA Korea's business is rapidly growing in China. Full Prospect, which operates FILA brand in China, has been displaying rapid earnings growth. Last year, the Chinese unit recorded 775 billion won of revenue, up more than 92 percent year-on-year.

"Establishing an intermediate holding company will help us make more rapid and informed decision to expand business activities," said a company official.

The move will also likely contribute to improve transparency in the company's corporate governance. FILA Holdings, the remaining entity and a new holding company after split-up, plans to implement series of measures to strengthen its corporate governance, such as setting dividend policies and enhancing corporate disclosure.

According to FILA Korea's Corporate Governance Report disclosed in June, the company satisfied only four of 15 key corporate governance indicators for the year ended December 31, 2018. It has pledged to continue to work on improving management transparency.

"We will keep making efforts to enhance corporate disclosure, such as publishing annual reports in English," the company official said.

(By reporter Yang Yong-bi)