October 30, 2024

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Retail giant Lotte Group’s South Korean holding company Lotte Corp. has agreed to sell a majority stake in its credit card arm Lotte Card to a consortium comprising MBK Partners and Woori Bank.

According to its disclosure on May 27, the board of directors have agreed to hand over 59,664,814 shares out of the total 74,740,061 -- amounting to 79.83 percent -- to MBK Partners, the nation’s largest private equity, in return for 1.4 trillion won ($1.2 billion) cash. 

Courtesy of Lotte Card

Related:
Seoul-based PEFs likely to acquire Lotte’s financial arms


MBK Partners is entitled to sell up to 20 percent stake in Lotte Card to Woori Bank, the nation’s fourth-largest commercial lender, or its subsidiaries, once the transaction is complete.

Following the transaction, Lotte Corp. will remain a minority stakeholder with 13.95 percent stake.

Lotte Card’s stake in other subsidiaries -- Lotte Capital and Lotte Hotel Pusan -- will also remain intact at 4.59 percent and 1.02 percent, respectively.

The transaction is designed to ward off a holding firm’s restrictions in terms of owning shares of financial or insurance companies here, as stipulated in the Monopoly Regulation and Fair Trade Act.

Introducing a holding company structure in November 2017, Lotte faced an imminent need to sell its stake in financial units such as Lotte Card, Lotte Non-Life Insurance and Lotte Capital by October 2019.

Plans and schedules for the transaction will materialize upon approval by authorities and the subsequent agreement between Lotte Corp. and MBK.

The news came a week after the consortium became the most preferred bidder of the sell-off, as Lotte Corp. dropped its plan to sell its card unit to Hahn & Co., the nation’s second-largest PEF. This came in part amid the intensifying legal battle surrounding an alleged tax evasion when selling off its portfolio N Search Marketing to KT affiliate Nasmedia in 2016.

Lotte Card is devoted to card payment service and installment loans. It is the fifth-largest credit card company in Korea, with 12.7 trillion won assets.

By Son Ji-hyoung (consnow@heraldcorp.com)