Lotte Group Sells Controlling Stake in Lotte Rental to US TPG for 1.3 Trillion Won
"Funds to Expand Hotel Business…
Group Portfolio Restructuring"
Lotte Group has sold Lotte Rental, the nation’s No. 1 car rental company, to the US-based global private equity fund Texas Pacific Group (TPG).
Lotte announced on the 11th that it has signed an agreement with TPG for the sale of its controlling stake in Lotte Rental. The stake for sale comprises the entire 61.2% held by Hotel Lotte (38.1%) and Busan Lotte Hotel (23%). The purchase price is 59,000 won per share, totaling 1.3105 trillion won.
Previously, Lotte Group attempted to sell Lotte Rental to global private equity fund Affinity Equity Partners last year, but the deal collapsed after it failed to obtain approval from the Fair Trade Commission due to concerns over limited competition, as Affinity already owns SK Rent-A-Car, the industry’s No. 2 player.
Afterward, Lotte held negotiations with potential buyers and, after reviewing the proposed enterprise value, acquisition structure, employment guarantees, speed of deal closure, and financing capability, selected TPG as the final acquirer.
Leveraging its experience and resources in investing in global mobility companies such as Uber, TPG plans to solidify Lotte Rental’s market leadership in Korea and enhance its enterprise value. TPG is also the second-largest shareholder of Kakao Mobility, the country’s leading taxi-hailing app.
Lotte plans to use the proceeds from this definitive agreement to improve the financial soundness of Hotel Lotte and Busan Lotte Hotel as well as to fund investments for expanding its hotel business. Additionally, Lotte aims to swiftly reorganize its portfolio focusing on core businesses and improve the profitability of its major business sectors based on this sale.
The transaction is expected to be finalized after approval for business combination from the Fair Trade Commission.
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A Lotte official stated, “We comprehensively considered market conditions and the company’s mid- to long-term growth strategy in selecting a buyer for Lotte Rental,” adding, “We will continue to strive to strengthen the fundamental competitiveness of our core businesses and further enhance our business portfolio.”
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