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| Lotte Card's headquarters in central Seoul / Courtesy of Lotte Card |
By Anna J. Park
Hana Financial Group turns out to be the only major financial group that has joined a preliminary round of bidding for acquiring Lotte Card that ended last week. Other major candidates that the market had previously anticipated to see joining in the acquisition race, such as Shinhan Financial, KT, Toss Bank and Woori Bank, are said to have not participated in the preliminary bidding.
According to local credit card industry sources, Hana Financial Group along with some strategic investors joined last week's preliminary bidding to acquire a 59.83 percent stake in Lotte Card owned by private equity firm MBK Partners. JPMorgan organized the process of the preliminary bidding round.
Hana Financial as well as MBK Partners both declined to confirm any facts about the bidding process, only saying there's nothing that they can publicly offer. But sources familiar with the issue said Hana's participation is aimed at strengthening its non-banking businesses.
In 2019, the private equity firm purchased the stake from Lotte Group at a price of 1.38 trillion won ($1 billion), becoming the largest shareholder of the card company. The remaining Lotte Card shares are held by Woori Bank and Lotte Shopping, which each own a 20 percent stake. MBK Partners is said to be eyeing around 3 trillion won for the selling price.
As Woori Bank already holds a 20 percent stake in the firm, it has a prior claim in the acquisition bidding, if it wants to join the race. But the bank didn't join the preliminary bidding round, as Woori Financial Group has put a priority on the acquisition of a securities company in the near future.
KT, a major Korean telecommunications firm, was also considered a major acquisition candidate, given that the company has BC Card as its subsidiary. Yet, the firm also would not clarify its official position on the matter, just adding that it is currently reviewing various options to strengthen its financial competitiveness.
Some market watchers anticipated whether digital banks, such as KakaoBank and Toss Bank, would show interest in acquiring the card company to broaden the scope of their businesses. But an official from Toss Bank said there has been no internal discussion on the matter.
Regarding the lukewarm atmosphere surrounding the acquisition bid, a market insider pointed out that it's still too early to judge, as last week's bidding round was just an initial phase of the acquisition deal that entails many further procedures ahead.
"Literally, the preliminary round of bidding is regarded as just a preliminary phase of the actual bidding process," the market insider, who is familiar with corporate M&A deals told The Korea Times. "The preliminary bidding is simply taken as a primary step through which sellers could get a grasp of potential buyers' level of interest and their pricing of the acquisition."
Under MBK Partners' ownership, Lotte Card has posted significant growth over the past years. The card company logged an annual net profit of 241.4 billion won last year, which is more than triple the 57.1 billion won it posted in 2019, the year when the private equity firm acquired the card company. It also boasts a diverse business portfolio, ranging from its mobility business and strong retail partnership with Lotte Shopping to solid overseas financial licensing in the Vietnamese market.
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