Key Takeaways
- • TPG, through its special-purpose vehicle Lexicon Korea Holdco, is launching a 28-day tender offer (November 6 to December 3) for the remaining 38.83% stake in Lotte Rental at 59,000 won (approximately $43) per share, a total of 831.7 billion won (approximately $613.0 million).
- • The tender price matches the per-share price TPG paid for Lotte Group's 61.17% controlling stake, which closed October 30 for approximately 1.3105 trillion won (approximately $965.8 million).
- • Total capital deployed in Lotte Rental rises to 2.1422 trillion won (approximately $1.6 billion) if the tender offer completes, with settlement set for December 7 and KB Securities as lead manager.
- • The goal is full ownership and a voluntary delisting from the Kospi, which would make this the first time control of the listed car rental operator has passed to a private equity firm.
- • TPG's stated strategy centers on B2B growth, using US fleet management company Element Fleet Management as its model.
Summary
Texas Pacific Group (TPG) is moving to acquire all remaining shares of Lotte Rental, South Korea's largest car rental operator, with the aim of making it a wholly owned subsidiary and then delisting it from the Kospi market. According to the company's disclosure, Lexicon Korea Holdco, a special-purpose company established by TPG, will conduct a 28-day tender offer for 14,097,325 common shares, representing a 38.83% stake, at 59,000 won (approximately $43) per share. The planned purchase totals 831.7 billion won (approximately $613.0 million), with KB Securities serving as lead manager. Of the tender funds, 166.3 billion won (approximately $122.6 million) was deposited into a KB Securities account on November 4, and the remaining 665.4 billion won (approximately $490.4 million) is to be funded by November 30. The largest shareholder of Lexicon Korea Holdco is TPG Lexicon LP, a foreign entity.
The tender price is identical to the price TPG paid for the controlling stake. TPG signed a share purchase agreement on August 11 to acquire the 61.17% holding from Hotel Lotte and Busan Lotte Hotel, completing payment and share transfer on October 30 for approximately 1.3105 trillion won (approximately $965.8 million). Including the tender offer, TPG's total capital commitment reaches 2.1422 trillion won (approximately $1.6 billion). TPG and KB Securities said the offer is intended to give minority shareholders the same price as the controlling-stake transaction, reflecting a control premium. They added that the delisting method will depend on the tender results and whether related requirements are met, and that no merger, split, or business transfer is planned after the offer.
Lotte Rental, which traces its roots to Kumho Rent-a-Car founded in 1989, was acquired by Lotte Group in 2015 for approximately 1.2 trillion won and listed on the Kospi in 2021. An earlier attempt by Affinity Equity Partners to acquire it for 1.6 trillion won fell through after the Korea Fair Trade Commission blocked the merger in January of this year. TPG secured exclusive due diligence and negotiation rights from Lotte Group in late May. Hankook & Company competed to the end with an offer in the mid-1 trillion won range, but Lotte Group reportedly selected TPG for greater deal certainty, including self-funded financing.
TPG plans a value-enhancement strategy focused on business-to-business transactions, modeled on Element Fleet Management. Observers note that the deal will reduce Lotte Rental's free float and that the Kospi will lose another private-equity-owned listed company. Industry commentators suggest the company's financial strategy for repaying acquisition debt and pursuing bolt-on deals could become more aggressive once unlisted. Subscription results and delisting requirements will determine next steps.
The tender price is identical to the price TPG paid for the controlling stake. TPG signed a share purchase agreement on August 11 to acquire the 61.17% holding from Hotel Lotte and Busan Lotte Hotel, completing payment and share transfer on October 30 for approximately 1.3105 trillion won (approximately $965.8 million). Including the tender offer, TPG's total capital commitment reaches 2.1422 trillion won (approximately $1.6 billion). TPG and KB Securities said the offer is intended to give minority shareholders the same price as the controlling-stake transaction, reflecting a control premium. They added that the delisting method will depend on the tender results and whether related requirements are met, and that no merger, split, or business transfer is planned after the offer.
Lotte Rental, which traces its roots to Kumho Rent-a-Car founded in 1989, was acquired by Lotte Group in 2015 for approximately 1.2 trillion won and listed on the Kospi in 2021. An earlier attempt by Affinity Equity Partners to acquire it for 1.6 trillion won fell through after the Korea Fair Trade Commission blocked the merger in January of this year. TPG secured exclusive due diligence and negotiation rights from Lotte Group in late May. Hankook & Company competed to the end with an offer in the mid-1 trillion won range, but Lotte Group reportedly selected TPG for greater deal certainty, including self-funded financing.
TPG plans a value-enhancement strategy focused on business-to-business transactions, modeled on Element Fleet Management. Observers note that the deal will reduce Lotte Rental's free float and that the Kospi will lose another private-equity-owned listed company. Industry commentators suggest the company's financial strategy for repaying acquisition debt and pursuing bolt-on deals could become more aggressive once unlisted. Subscription results and delisting requirements will determine next steps.
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