Same Shares, Different Treatment... VIP Asset Management: "We Will Tender All Shares in Lotte Rental Offer"

TPG to Make Tender Offer for Remaining Lotte Rental Shares
Offer Price of 59,000 Won; Affinity's Offer Was 2.6 Times the Market Price
VIP Asset Management to Tender Its Entire 7.33% Stake
"Allowing the Largest Shareholder to Buy First Will Continue to Discriminate Against Shareholders"

Kim Minguk and Choi Juncheol, co-CEOs of VIP Asset Management

VIP Asset Management, the second-largest shareholder of Lotte Rental, welcomed TPG, a private equity fund (PEF) manager, making a tender offer for Lotte Rental and decided to tender all of its shares. Unlike Affinity Equity Partners' acquisition of Lotte Rental, the offer gives ordinary shareholders, as well as the largest shareholder, the opportunity to sell their shares at the same price. VIP Asset Management urged lawmakers to revise the mandatory tender offer system currently under discussion in the National Assembly so that it does not discriminate among shareholders and guarantees equal opportunities for all.

Shareholders in the Same Company Treated Differently Just Two Years Apart

On November 2, VIP Asset Management said it would tender its entire 7.33% stake in Lotte Rental in TPG's tender offer for the company.

On October 30, TPG acquired Lotte Group's 61.17% stake in Lotte Rental for 59,000 won per share, or 1.3105 trillion won in total. TPG is now pursuing a voluntary delisting and has been making a tender offer for all of the remaining 38.83% stake, or 14,097,325 shares, at the same price from November 6 through December 3. Under the terms, TPG will purchase all shares tendered, regardless of when they are submitted.

This contrasts with Affinity's earlier proposed acquisition of Lotte Rental. At the time, Lotte Group agreed to sell its 56.2% stake for 77,115 won per share—about 2.6 times the then-share price of 29,400 won—for a total of 1.5729 trillion won. Ordinary shareholders were not given the opportunity to sell their shares at the same price. Instead, Lotte Rental's board of directors decided to issue new shares to Affinity at 29,180 won per share. The decision gave only the largest shareholder a premium, while ordinary shareholders saw their ownership stakes diluted without even getting an opportunity to sell. VIP Asset Management publicly opposed the rights offering at the time. The deal later fell through after the Fair Trade Commission prohibited the business combination.

Kim Minkook, CEO of VIP Asset Management, said, "It's the same company and the same shares, but the opportunity to sell given to ordinary shareholders has changed completely in just two years." This shift came after the Commercial Act was amended in July 2025 to explicitly stipulate directors' duty of loyalty to shareholders. Kim said, "Since then, ordinary shareholders have also been offered the same price as the largest shareholder in cases involving Douzone Bizon and ecom marketing, among others. In the recent acquisition negotiations involving Gabia, ordinary shareholders of its listed subsidiary KINX were also given the opportunity to sell all their shares. Lotte Rental is another example showing that the market is embracing equal treatment of shareholders as a new standard."

Mandatory Tender Offer System Needs Revision... Largest Shareholder Must Not Sell First

VIP Asset Management said the deal highlights problems with the revised mandatory tender offer bill passed by the National Assembly's Political Affairs Committee. The committee's bill requires shares acquired from the largest shareholder first to count toward the mandatory purchase threshold of "50% plus one share." If applied to the Lotte Rental deal, TPG would meet the threshold simply by acquiring the largest shareholder's 61.17% stake. This would mean that, under the formula, the minimum additional number of shares TPG would have to offer to purchase from ordinary shareholders would be zero.

Kim criticized the inconsistency, saying, "It makes no sense to explicitly state the principle of equal treatment of shareholders in the Commercial Act, while allowing only the largest shareholder to sell all of their shares in a change-of-control transaction and denying ordinary shareholders even the opportunity to sell. It's like a warm iced Americano."

He also disputed concerns that the mandatory tender offer system would dampen the mergers and acquisitions (M&A) market. He said it was difficult to find another major country, apart from South Korea during the Asian financial crisis, that had abolished the system on the grounds that it would constrain M&A activity. Instead, he stressed, the system has become a key safeguard for protecting the rights and interests of ordinary shareholders.

Kim cited a comparative study of 41 countries by a research team led by Korea University Professor Kim Woochan, saying that the average control premium fell from about 60% to 23% after the system was introduced. The point, he said, is that if the largest shareholder gives up part of the control premium, the financial burden on the acquirer can be reduced.

In Lotte Rental's case, the largest shareholder sold a larger stake than under Affinity's earlier proposal, but the total sale proceeds were about 262.4 billion won lower. Although the timing and terms of the transactions differed, the case shows that a change-of-control transaction can still be completed even when the largest shareholder accepts a lower sale price.

VIP Asset Management also noted that the Asian Corporate Governance Association (ACGA) and the International Corporate Governance Network (ICGN) recently sent a letter to the National Assembly calling for stronger shareholder protections in the mandatory tender offer system. Kim said, "If, when control of a company changes, only the largest shareholder receives a premium and ordinary shareholders do not even get the chance to sell alongside them, investors will inevitably assign a lower value to the stock in the first place. Domestic and international investors will have a basis for long-term investment in the Korean market only when confidence grows that ordinary shareholders, too, will have the opportunity to sell at the same price as the largest shareholder."

This content was produced with the assistance of AI translation services.