SEOUL, April 7 (Korea Bizwire) – Lotte Duty Free, South Korea’s No. 1 duty-free operator, said Thursday it is mulling an acquisition of a foreign luxury goods maker with high brand value in a bid to further bolster its business.
The move is seen as the company’s strategy to create synergies by having a premium luxury product maker under its wing as a duty-free shop’s success usually hinges on whether it houses luxury brands or not.
“Seeing the need for overseas mergers and acquisitions, Lotte Duty Free is reviewing an action plan,” said an official of Lotte Group, its parent. “It will soon start drawing up a shortlist of targets.”
If a deal is struck, Lotte Group, South Korea’s 7th-largest family-controlled conglomerate, is expected to use part of the proceeds from an initial public offering of its hotel unit.
Hotel Lotte Co. has been preparing to go public on the Seoul bourse in June as part of the group’s reform measures after a succession feud between the Lotte founder’s two sons prompted calls for the reform of its murky governance structure.
Lotte has not yet revealed the amount of its planned IPO price, but the proceeds from the stock sale are estimated to reach at least 4 trillion won (US$3.47 billion).
Lotte Group reportedly plans to earmark some 2 trillion won for overseas M&As in an effort to boost the presence of Lotte Duty Free, seen as the group’s cash cow.
Lotte said it is contacting Australian duty-free shops about possible mergers and acquisitions, and plans to sound out the possibility of taking over foreign luxury brands.
“Access to such luxury brands as Hermes, Chanel and Louis Vuitton may be difficult, but we will be able to acquire other luxury brands if negotiations on the takeover price go well,” the official said.
Whether to own a luxury brand or not will have a great impact on its push to expand its global presence down the road, he added.
A week ago, Lotte Duty Free opened a duty-free store in Tokyo’s upscale shopping district of Ginza to target rising Chinese travelers there, the second outlet following the one that opened in the Japanese capital in late January.
As of 2015, Lotte was the world’s No. 3 duty-free operator by revenue after Dufry of Switzerland and DFS Group of the United States.’