Lotte Group has halted talks to sell Lotte Rental that it had been conducting with private equity fund (PEF) manager Affinity Equity Partners. The company said it will continue the sale through negotiations with other potential investors, aiming to complete the deal within the year.
Lotte Group said on the 18th that it had "continued consultations with Affinity after receiving the review result from the Korea Fair Trade Commission, but judged that it would be difficult to pursue the transaction any further because the two sides failed to reach a final agreement on matters related to the transaction."
Earlier, in Mar. last year, Lotte Group signed a contract to sell a total 56.2% equity in Lotte Hotel held by Hotel Lotte and Busan Lotte Hotel to Affinity for 1.6 trillion won. At the time, amid concerns over financial soundness, Lotte Group planned to secure liquidity by selling Lotte Rental, the No. 1 player in the domestic rental car industry.
However, in Jan. this year, the Korea Fair Trade Commission blocked the corporate merger, sinking the transaction. The Korea Fair Trade Commission (FTC) determined that if Affinity, which already owns the No. 2 player SK Rent-a-Car, also acquired Lotte Rental, it could restrict competition in the domestic rental car market.
Lotte Group said it will continue discussions on an equity sale with potential investors going forward. Lotte Group said, "As Lotte Rental is drawing strong interest in the market based on solid results and excellent growth potential, we will push ahead with a sale aiming to close within the year after comprehensively considering market conditions and the company's mid- to long-term growth strategy."
Last year, Lotte Rental's revenue was 2.9188 trillion won, up 4.5% from a year earlier, and net income for the same period rose 23.4% to 126.7 billion won. In the first quarter of this year, it posted a record-high quarterly revenue of 730.9 billion won. Net income came to 30.3 billion won, up 1.6%.