Lotte Shopping said on the 1st that Lotte Cultureworks will halt talks with Contentree JoongAng on a merger between Lotte Cinema and Megabox. The memorandum of understanding (MOU) signed for the merger expired on the 30th of last month.
The merger talks, which began on May last year, drew attention as a "big deal" that would tie the No. 2 multiplex (Lotte Cinema) and No. 3 (Megabox) to form a two-way rivalry against No. 1 CJ CGV. But differing views over corporate value assessment, equity ratios, and investment attraction led to repeated extensions of the MOU deadline without progress.
On top of that, JoongAng Group, Megabox's parent, fell into a liquidity crunch and Contentree JoongAng entered rehabilitation proceedings, shaking the premise of the merger itself. With its earnings improved, Lotte had less reason to push through a merger that would absorb weaknesses, analysts said. Boosted by a recovery in the film market, Lotte Cultureworks swung to a profit in the first quarter of this year. With the merger falling through, Lotte Cinema is expected to pivot to standalone survival.