Key Takeaways
- • TPG will launch a 28-day tender offer, running until December 3, to acquire the remaining 38.83% stake in Lotte Rental at 59,000 won per share, according to a tender offer announcement dated the 6th.
- • The tender offer covers 14,097,325 shares and requires about 831.7 billion won, of which 166.3 billion won was deposited with KB Securities on the 4th and the balance of 665.4 billion won is due by the 30th of the month.
- • TPG's buyer vehicle, Lexicon Korea Holdco, aims to secure 100% ownership and voluntarily delist Lotte Rental, with the delisting method to depend on tender results and regulatory requirements.
- • The offer price matches the per-share price in TPG's August 11 stock purchase agreement with Hotel Lotte and Busan Lotte Hotel, under which TPG bought a 61.17% stake for about 1.31 trillion won.
- • The transaction marks the first transfer of management rights in Lotte Rental to a private equity fund, following the collapse of Affinity Equity Partners' 1.6 trillion won MOU after the Fair Trade Commission blocked the deal in January.
Summary
Texas Pacific Group (TPG), the global private equity firm, will make a tender offer for the remaining 38.83% stake in Lotte Rental, according to a tender offer announcement dated the 6th reported by Maeil Business Newspaper. The offer runs for 28 days through December 3, with a purchase price of 59,000 won per share and payment scheduled for December 7. KB Securities is handling the tender. If fully successful, TPG would hold 100% of Lotte Rental's issued shares.
The tender is being executed by Lexicon Korea Holdco, a special purpose company of TPG whose largest shareholder is TPG Lexicon LP, a foreign corporation. The total funding requirement is 831.7 billion won. Of this, 166.3 billion won was deposited in KB Securities' account on the 4th, with the remaining 665.4 billion won to be deposited by the 30th of the current month.
The offer price equals the per-share sale price under the stock purchase agreement TPG signed with Hotel Lotte and Busan Lotte Hotel on August 11. TPG said the tender is intended to give general shareholders a chance to recover their investment at a price that reflects a management premium. Following the August transaction, in which TPG acquired 61.17% of Lotte Rental from the Lotte Group for approximately 1.31 trillion won, the firm seeks to become a wholly owned subsidiary and voluntarily delist the company. The specific delisting route will depend on the tender results and whether applicable requirements are met. TPG stated that it has no plans for mergers, spin-offs, or business transfers following the tender.
The deal is the first transfer of management rights in Lotte Rental to a private equity fund. The company originated as Kumho Rental Car, launched in 1989 by Kumho Asiana Group in partnership with Hertz, and later passed through KT and the Lotte Group. An earlier memorandum of understanding with Affinity Equity Partners, valued at 1.6 trillion won, collapsed after the Fair Trade Commission refused to approve the business combination in January. TPG began negotiations with Lotte Group and secured independent due diligence and negotiation rights at the end of May. Korea & Company made a late bid at a price in the mid-1 trillion won range, but Lotte Group reportedly selected TPG on the strength of its higher deal certainty, including its ability to raise funds from its own fund. TPG plans to pursue B2B-focused value creation modeled on U.S. fleet management company Element Fleet Management, which leases and manages vehicles for corporations and governments.
The tender is being executed by Lexicon Korea Holdco, a special purpose company of TPG whose largest shareholder is TPG Lexicon LP, a foreign corporation. The total funding requirement is 831.7 billion won. Of this, 166.3 billion won was deposited in KB Securities' account on the 4th, with the remaining 665.4 billion won to be deposited by the 30th of the current month.
The offer price equals the per-share sale price under the stock purchase agreement TPG signed with Hotel Lotte and Busan Lotte Hotel on August 11. TPG said the tender is intended to give general shareholders a chance to recover their investment at a price that reflects a management premium. Following the August transaction, in which TPG acquired 61.17% of Lotte Rental from the Lotte Group for approximately 1.31 trillion won, the firm seeks to become a wholly owned subsidiary and voluntarily delist the company. The specific delisting route will depend on the tender results and whether applicable requirements are met. TPG stated that it has no plans for mergers, spin-offs, or business transfers following the tender.
The deal is the first transfer of management rights in Lotte Rental to a private equity fund. The company originated as Kumho Rental Car, launched in 1989 by Kumho Asiana Group in partnership with Hertz, and later passed through KT and the Lotte Group. An earlier memorandum of understanding with Affinity Equity Partners, valued at 1.6 trillion won, collapsed after the Fair Trade Commission refused to approve the business combination in January. TPG began negotiations with Lotte Group and secured independent due diligence and negotiation rights at the end of May. Korea & Company made a late bid at a price in the mid-1 trillion won range, but Lotte Group reportedly selected TPG on the strength of its higher deal certainty, including its ability to raise funds from its own fund. TPG plans to pursue B2B-focused value creation modeled on U.S. fleet management company Element Fleet Management, which leases and manages vehicles for corporations and governments.
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