[Featured Stock] Lotte Rental, Pursuing Sale, Hits Record High Then Plummets 17%...

Rising on Sale Expectations Then Plunging, Down 17% from Peak
Private Equity Firm Affinity Equity Partners to Acquire
Sale Price Over 1 Trillion Won... Likely Used for Lotte Group Liquidity Support

Lotte Rental, which announced its sale, hit a 52-week intraday high before falling nearly 20%.

As of 2:30 PM on the 9th, Lotte Rental is trading at 29,950 KRW, down 10.18% (3,400 KRW) from the previous trading day. On the same day, Lotte Rental recorded a 52-week high of 35,950 KRW shortly after the market opened. However, it continued to decline afterward, and the 30,000 KRW level was breached in the afternoon. This represents a 17% drop from the intraday high.

On the 6th, Lotte Rental announced that it signed a memorandum of understanding (MOU) with Affinity Equity Partners, a Hong Kong-based private equity firm, for the acquisition of a 56.2% stake. The acquisition is valued at approximately 1.5792 trillion KRW at 77,000 KRW per share. Affinity Equity Partners currently owns SK Rent-a-Car, the second-largest company in the rental car industry.

With expectations of synergy with the industry leader Lotte Rental, the securities industry responded positively, and the stock price showed some warmth. There were also reactions anticipating benefits from interest rate cuts due to the nature of the rental industry. However, the stock has not been able to sustain the rally reflecting such optimism.

The reason Lotte Group is selling Lotte Rental is due to difficulties caused by sluggish performance in the distribution and chemical sectors over recent years. In particular, concerns about the group’s overall liquidity increased following rumors of a corporate bond crisis related to Lotte Chemical. The proceeds from the sale of Lotte Rental will be used to supply liquidity to Hotel Lotte, which has turned to a deficit, and this is expected to have a positive impact on Hotel Lotte’s IPO (initial public offering) as well.