Key Takeaways
- • Lotte Group completed the sale of a 61.2% controlling stake in Lotte Rental to U.S.-based private equity firm TPG for 1.3105 trillion won (approximately $982.5 million), at 59,000 won (approximately $44) per share.
- • The stake was held by Hotel Lotte (38.1%) and Busan Lotte Hotel (23.0%) and is now held by Lexicon Korea Holdco, a special-purpose vehicle established by TPG for the acquisition.
- • The Korea Fair Trade Commission approved the deal on September 1 after blocking an earlier sale to Affinity Equity Partners, which owns SK Rent-a-Car, in January over competition concerns in the rental car market.
- • Lotte Rental dropped the group's "L" symbol from its logo but retains the "Lotte" name; the brand usage contract end date was moved up to October 30 from December 31, 2027.
- • Lotte Group will use the proceeds to strengthen the finances of Hotel Lotte and Busan Lotte Hotel while continuing to divest non-core assets.
Summary
Lotte Group on October 30 finalized the transfer of a 61.2% controlling stake in Lotte Rental to TPG (Texas Pacific Group) for 1.3105 trillion won, or approximately $982.5 million, according to the company's disclosures as reported by BigGo Finance. The shares were held by Hotel Lotte (38.1%) and Busan Lotte Hotel (23.0%) and were fully transferred under a share purchase agreement signed on August 11. The largest shareholder is now Lexicon Korea Holdco, an SPC established by TPG. The transaction was completed after the Korea Fair Trade Commission approved the business combination on September 1.
The sale followed a difficult process. Lotte had previously pursued a deal with Affinity Equity Partners, owner of SK Rent-a-Car, but the Korea Fair Trade Commission blocked that combination in January, judging that common control of the country's No. 1 and No. 2 rental car operators would likely restrict competition and raise prices. The regulator found no competition concerns in the TPG transaction because the business areas of Lexicon Korea Holdco and Lotte Rental do not overlap.
At an extraordinary shareholders' meeting held the same day, shareholders approved the appointment of Yoon Shin-won, TPG's head of Korea investment, and Jubin Jamshid Irani, TPG's head of Asia portfolio operations, as non-executive directors for three-year terms. Yoon previously led Morgan Stanley Private Equity's Korea buyout investments.
Lotte Rental, which began in 1989 as Kumho Rent-a-Car, was acquired by KT in 2010 and bought by Lotte Group in 2015 for about 1.02 trillion won. Its brand arrangements have also changed: the logo used at the meeting omitted the group's "L" symbol, and the company will keep the "Lotte" name for now. Lotte Rental had moved up the end date of its brand usage contract with Lotte Holdings to October 30 from December 31, 2027, with the related transaction amount adjusted to 10.169 billion won from about 21.859 billion won.
Lotte Group said it intends to use the proceeds to improve the financial soundness of Hotel Lotte and Busan Lotte Hotel and to strengthen their competitiveness. The sale is part of a portfolio restructuring under way since last year. Other affiliates are also reorganizing, including Lotte Chemical, Lotte Energy Materials and Lotte Shopping, and Hotel Lotte is selling L7 Gangnam. The extent to which the proceeds improve the group's financial structure will depend on debt repayment and future investment pace, and how TPG shapes Lotte Rental's strategy will be a key point to watch.
The sale followed a difficult process. Lotte had previously pursued a deal with Affinity Equity Partners, owner of SK Rent-a-Car, but the Korea Fair Trade Commission blocked that combination in January, judging that common control of the country's No. 1 and No. 2 rental car operators would likely restrict competition and raise prices. The regulator found no competition concerns in the TPG transaction because the business areas of Lexicon Korea Holdco and Lotte Rental do not overlap.
At an extraordinary shareholders' meeting held the same day, shareholders approved the appointment of Yoon Shin-won, TPG's head of Korea investment, and Jubin Jamshid Irani, TPG's head of Asia portfolio operations, as non-executive directors for three-year terms. Yoon previously led Morgan Stanley Private Equity's Korea buyout investments.
Lotte Rental, which began in 1989 as Kumho Rent-a-Car, was acquired by KT in 2010 and bought by Lotte Group in 2015 for about 1.02 trillion won. Its brand arrangements have also changed: the logo used at the meeting omitted the group's "L" symbol, and the company will keep the "Lotte" name for now. Lotte Rental had moved up the end date of its brand usage contract with Lotte Holdings to October 30 from December 31, 2027, with the related transaction amount adjusted to 10.169 billion won from about 21.859 billion won.
Lotte Group said it intends to use the proceeds to improve the financial soundness of Hotel Lotte and Busan Lotte Hotel and to strengthen their competitiveness. The sale is part of a portfolio restructuring under way since last year. Other affiliates are also reorganizing, including Lotte Chemical, Lotte Energy Materials and Lotte Shopping, and Hotel Lotte is selling L7 Gangnam. The extent to which the proceeds improve the group's financial structure will depend on debt repayment and future investment pace, and how TPG shapes Lotte Rental's strategy will be a key point to watch.
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