Lotte Group to Sell Car Rental Arm for $1.12 Billion Amid Liquidity Concerns | Be Korea-savvy

Lotte Group to Sell Car Rental Arm for $1.12 Billion Amid Liquidity Concerns


This undated file photo provided by Lotte Rental Co. shows its facility located in Anseong, 67 kilometers south of Seoul. (Yonhap)

This undated file photo provided by Lotte Rental Co. shows its facility located in Anseong, 67 kilometers south of Seoul. (Yonhap)

SEOUL, Dec. 7 (Korea Bizwire) – South Korea’s retail conglomerate Lotte Group said Friday it has picked a Hong Kong-based private equity fund for talks to sell its car rental arm for 1.6 trillion won (US$1.12 billion), marking its first major deal amid concerns over a potential liquidity crisis.

Under the agreement, Lotte Group has selected Affinity Equity Partners as the preferred bidder to purchase a 56.2 percent stake in Lotte Rental Co., which is currently held by Hotel Lotte Co. and Hotel Lotte Pusan Co., at 77,115 won per share.

The value of Lotte Rental was set at 2.8 trillion won during the negotiations. Lotte Rental closed at 33,350 won on the main bourse Friday, up 0.45 percent from the previous session.

“Lotte has been making efforts to streamline businesses that do not align with the group’s mid- and long-term strategy after thoroughly reviewing its business portfolios,” the group said in a statement.

Lotte Group added that it plans to pursue a “two-track” strategy of selling off such businesses while expanding investments in emerging sectors, such as biohealth and artificial intelligence.

Lotte and Affinity Equity Partners agreed to prioritize employment security for Lotte Rental employees, it added.

As of the third quarter, Lotte Rental had accounted for 20.8 percent of the South Korean market, compared with 15.7 percent held by No. 2 player SK Rent-a-Car Co.

When finalized, Affinity Equity Partners, which already owns SK Rent-a-Car, will operate Lotte Rental as a separate brand for at least three years.

Last week, Lotte announced the replacement of 21 CEOs across its affiliates and subsidiaries in a sweeping leadership reshuffle amid growing concerns over a potential liquidity crisis.

Lotte Group, South Korea’s sixth-largest business group by assets, has faced rumors of a liquidity crunch, driven by poor performance in its chemical and retail subsidiaries.

(Yonhap)

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