This article was displayed on the ChosunBiz MoneyMove (MM) site at 11:10 a.m. on May 31, 2026.
As Lotte Group resumes the sale of Lotte Rental, the investment banking (IB) industry is focusing on its price defense strategy.
Because the previously agreed sale price with Affinity Equity Partners assumed integration synergies with SK Rent-a-Car, it will not be easy for new bidders to accept the same price as is.
However, resistance within Lotte Group to sharply lowering the sale price is said to be strong. As a result, there is speculation that Lotte may try to defend the price by partially sharing the downside risk for bidders through measures such as subordinated capital contributions.
According to the investment banking (IB) industry on the 31st, Lotte Group is again pushing to sell management control of Lotte Rental. Multiple global private equity funds, including TPG, and some large corporations are said to be reviewing an acquisition of Lotte Rental.
Hotel Lotte and Busan Lotte Hotel signed a stock purchase agreement (SPA) in March last year to sell their 56.2% equity in Lotte Rental to Affinity. But in January this year, the Korea Fair Trade Commission blocked a business combination between SK Rent-a-Car, a portfolio company of Affinity, and Lotte Rental, and the two sides formalized the termination of the contract on the 18th.
The market is watching to see how much Lotte can defend the previous sale price in this resale. Affinity's proposed price was 77,115 won per share, which carried a management control premium of more than 160% over the then market price. The total sale price was about 1.5728 trillion won, and on a 100% equity value basis for Lotte Rental, it came to about 2.8 trillion won.
However, Affinity's proposed price reflected its particularity of "owning SK Rent-a-Car." Affinity planned to generate integration synergies by acquiring Lotte Rental, the No. 1 player, after acquiring SK Rent-a-Car, the No. 2 player, in the domestic rental car market. But the Korea Fair Trade Commission (FTC) blocked the combination of the two companies, eliminating that synergy logic, and the market's general view is that it is difficult for new bidders to accept the previous price as is.
Financing for the acquisition would also be a heavy lift. If the previous sale price is applied as is, the gap between the current share price (low 30,000-won range) equity value and the acquisition price would widen, and typical acquisition financing would push the loan-to-value (LTV) far above 100% against collateral value.
A source in the IB industry said, "No institution would be able to get acquisition financing under these conditions through its investment screening committee." In fact, rather than raising debt solely against Lotte Rental, Affinity planned to bundle Lotte Rental and SK Rent-a-Car together to raise about 1.3 trillion won in acquisition financing.
The problem for Lotte Group as well is strong resistance to sharply lowering the sale price. According to the industry, top executives at Lotte Group are said to view the situation as, "The previous transaction fell through not because corporate value declined but because of the Korea Fair Trade Commission, so why should we sell at a steep discount?"
Since Affinity already accepted a high price, there is concern that a steep discount in the resale process could make it look as if Lotte itself is acknowledging a lower corporate value for Lotte Rental.
For this reason, the IB industry is discussing a plan in which Lotte participates as a subordinated investor in the buyout fund instead of directly lowering the sale price. Because subordinated capital absorbs losses first, it reduces downside risk for bidders. For Lotte, this could ease the bidder's actual burden without sharply lowering the headline sale price.