Hotel Lotte and Busan Lotte Hotel to Transfer Over 56.2% Stake
Lotte to Sell Non-Core Businesses and Invest in New Ventures
Lotte Rental Prioritizes Stable Employment for Employees
Affinity Commits to Operating Separate Corporation for 3 Years
Hotel Lotte to Improve Financial Structure and Secure Funds for Global Expansion
Lotte Group is transferring Lotte Rental, the No. 1 car rental company in Korea, to the global private equity firm Affinity Equity Partners (Affinity). The sale amount is approximately 1.6 trillion KRW.
Hotel Lotte, the largest shareholder of Lotte Rental, announced on the afternoon of the 6th that it had held a board meeting and selected Affinity as the preferred bidder for the acquisition of Lotte Rental. On the same day, the two parties signed a binding memorandum of understanding (binding MOU) for the sale of management rights shares.
The sale target is 56.2% of shares held by Hotel Lotte and Busan Lotte Hotel, with a sale amount of about 1.6 trillion KRW. It is known that in this sale negotiation, Lotte Rental's company value was evaluated at around 2.8 trillion KRW. By being selected as the preferred bidder for Lotte Rental, Affinity can conduct exclusive negotiations with Lotte for a certain period.
Earlier, after switching to an emergency management system in August, Lotte thoroughly analyzed the group's business portfolio and began to dispose of businesses that did not align with its mid- to long-term strategy. Accordingly, it decided to pursue a two-track strategy of sales to focus on core businesses and growth through new business investments such as bio and artificial intelligence (AI).
Lotte Rental is the No. 1 car rental company in Korea. On a consolidated basis, its cumulative sales and operating profit for the first to third quarters of this year were 2.0715 trillion KRW and 213.2 billion KRW, respectively. Lotte explained that although Lotte Rental records excellent profitability, the nature of the rental business does not align with the group's growth strategy, leading to the decision to sell. It added that it plans to nurture the mobility sector, one of the group's four new growth engines, focusing on technology-based businesses such as electric vehicle charging and autonomous driving.
Affinity acquired SK Rent-a-Car, the No. 2 car rental company, in the first half of this year. If it acquires Lotte Rental this time, it will own both the No. 1 and No. 2 car rental companies, securing a market share of 36.5%.
Lotte and Affinity agreed to prioritize stable employment guarantees for Lotte Rental employees. Affinity will operate Lotte Rental as a separate corporation from SK Rent-a-Car for the next three years and will use the Lotte brand during that period.
A Lotte official said, "This share sale was conducted by comprehensively considering Lotte Rental's future competitiveness and sustainable growth, and the employment stability of Lotte Rental members will be prioritized."
Meanwhile, Hotel Lotte and Busan Lotte Hotel, the largest and second-largest shareholders of Lotte Rental, expect their financial structure to improve with the inflow of funds from this sale. Hotel Lotte and Busan Lotte Hotel plan to use the sales proceeds to repay borrowings and as resources for global expansion and strengthening global brands.
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