The Hotel Lotte chain is planning what is anticipated as South Korea’s biggest public offering in March or April. The IPO is expected to raise between $3 billion and $5 billion,
the
Financial Times
reported.
Hotel Lotte “is key to the complex share structure” of the parent company, Lotte, which is one of South Korea’s largest
chaebol
conglomerates, the
FT
article said.
The conglomerate also holds large stakes in listed businesses Lotte Shopping, Lotte Foods and Lotte Chemical, the article said. In the first half of last year, it generated sales of 2.5 trillion Won ($2.1 billion), the article said. Lotte’s duty-free store business, which generated 86% of its revenue during that time, recently lost a license to operate one of its three stores in Seoul, the report noted.
“Lotte’s controlling family moved to float Hotel Lotte last month after a feud in the summer led to widespread public criticism of the opaque structure through which the founding Shin clan exercises control over the country’s biggest retail group,” the article said.
The Shin family controls nearly all the shares in Hotel Lotte “through a web of unlisted companies in Japan, where the company was founded by South Korean emigrant Shin Kyuk-ho in 1948,” the
FT
report said. Lotte Holdings is Hotel Lotte’s largest shareholder.
Shin Kyuk-ho, 93, had been handing over control of Hotel Lotte to his younger son, Shin Dong-bin. But in July, the patriarch and his elder son, Shin Dong-joo, tried to remove Dong-bin from the Lotte Holdings board. In response, Dong-bin ousted his father from the chairmanship of Lotte Holdings, the article said.
“Analysts say Shin Dong-bin still has effective control of the group, and he has sought to restore public confidence in its leadership through the floatation of Hotel Lotte,” the article said. The
FT
report said Dong-bin has also tried to eliminate “some of the hundreds of ‘circular’ shareholding links between group businesses.” (Source:
Financial Times
, Jan. 14, 2016.)
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