Lotte’s bid failure pulls down shares of Lotte Shopping, Hi-mart and Eugene


MBK Partners, the largest private equity fund in Korea, was chosen over Lotte Shopping Co. as the preferred bidder for a controlling stake in Hi-mart Co., the country’s No. 1 electronics retailer.

MBK Partners offered to buy the 65.25 percent stake in Hi-mart for over 1.25 trillion won ($1.07 billion), which translates into about 8,000 won per share, according to sources.

The stake includes a 31.34 percent stake held by Eugene Corp., 17.37 percent held by former Hi-mart chief executive Sun Jong-koo, 5.66 percent owned by Hi Consortium, and 6.01 percent held by NH Halloween No. 1 PEF.

“Eugene Corp., ex-CEO Sun Jong-koo and Hi Consortium selected MBK Partners as the preferred bidder for the sale,” Hi-mart said in a regulatory filing on Monday.

“Specific conditions such as whether to sign a stock purchase agreement will be determined through negotiations among the parties directly involved in the sale.”

The news of Lotte’s failure to acquire Hi-mart pulled down share prices of Lotte Shopping by 3.97 percent, Hi-mart by 7.4 percent and Eugene by 8.97 percent, respectively, on Monday. Market expectations had been high that Lotte would acquire Hi-mart and create much synergy.

In addition to MBK Partners and Lotte, Carlyle Group competed in the final bidding. SK Networks and Shinsegae E-Mart dropped out of the race earlier citing possible blows from the unstable European economy and Hi-mart’s “internal complications,” respectively.

Hi-mart and MBK Partners already signed a binding memorandum of understanding, and plan to ink a sale and purchase agreement within two weeks.

Samsung Securities Co. said in a report that the sale is expected to be completed shortly as MBK Partners offered an acquisition price that is about 45 percent higher than the current share price of Hi-mart.

Lotte Shopping reportedly offered a price of slightly over 75,000 won per share and did not respond when it was asked to submit a revised tender.

Samsung Securities added that considering the high percentage of the stake being acquired, MBK Partners could seek partnerships with other retailers or strategic investors for Hi-mart.

Hi-mart, which has more than 300 outlets across the country and a 35 percent market share in the local electronic home appliance retail sector, was put up for sale amid a management feud between its CEO Sun and Eugene Corp. in November last year.

The electronics retailer faced the danger of being delisted from the Korea Exchange when the prosecution indicted Sun in April on charges of embezzlement and breach of trust.

The company has been taking steps to normalize business after its board dismissed Sun as the CEO in late April.

By Kim So-hyun (sophie@heraldcorp.com)