VIP Asset Management announced on the 12th that it welcomes the tender offer for Lotte Rental by Pacific Group (TPG), a global private equity fund manager, and has decided to submit all of its held shares to the offer. VIP Asset Management is the second-largest shareholder of Lotte Rental, with a disclosed shareholding ratio of 7.33%.
On Oct. 30, TPG acquired the entire 61.17% stake in Lotte Rental held by Lotte Group at 59,000 won per share, for a total of 1.3105 trillion won. Following this, TPG announced that it is proceeding with a voluntary delisting and will conduct a public tender offer for the remaining 38.83% stake at the same price from the 6th of this month to the 3rd of next month. The condition is that all shares applied for sale will be purchased, regardless of the subscription rate.
Under the originally proposed Affinity acquisition plan, Lotte Group was to sell a 56.2% stake at 77,115 won per share, for a total of 1.5729 trillion won. This price was approximately 2.6 times the then-share price of 29,400 won, but general shareholders had no opportunity to sell. Simultaneously, the Lotte Rental board of directors decided to allocate new shares to Affinity at 29,180 won per share.
In a statement, VIP Asset Management stated that "only major shareholders receive a premium while the shareholding ratio of general shareholders is diluted," and publicly opposed the rights offering (paid-in capital increase).
The acquisition by Affinity was aborted after the Fair Trade Commission issued a ban on the business combination. Lotte Group resumed efforts to sell Lotte Rental, signing a stock purchase agreement with TPG on August 11 this year to transfer all shares, including management control, and received approval for the business combination from the Korea Fair Trade Commission.
Kim Min-guk, CEO of VIP Asset Management, said, "It is the same company and the same stock, yet the sale opportunity given to general shareholders has changed completely in just two years," adding that this is "a case showing that the market is accepting fair treatment of shareholders as a new standard."
VIP Asset Management expressed concern that if the mandatory tender offer system is finalized at the '50% + 1 share' threshold passed by the National Assembly's Political Affairs Committee, cases similar to TPG-Lotte Rental are unlikely to reoccur.
The committee's bill includes shares first purchased from major shareholders in the mandatory purchase quantity of '50% + 1 share.' Applying this standard to the Lotte Rental sale, TPG would already exceed the legal threshold simply by acquiring Lotte Group's 61.17% stake. In other words, under the committee's bill, there are no additional shares that must be purchased from general shareholders.
CEO Kim stated, "If one can meet all legal standards by purchasing only major shareholder stakes, there is a great concern that even the market trend of voluntarily offering the same price to general shareholders will be reversed."
As an alternative, they proposed 'proportional tender offer,' which was announced in a joint statement by 18 domestic and international asset management firms at the end of September last month.
This proposal maintains the '50% + 1 share' standard passed by the National Assembly's Political Affairs Committee but excludes the method of prior purchase from major shareholders, ensuring that all shareholders wishing to sell can participate in the same tender offer. If the subscription volume exceeds the planned purchase quantity, shares will be purchased proportionally to the number of shares each shareholder subscribed to.
CEO Kim emphasized, "Only when trust builds that general shareholders also have the opportunity to sell at the same price as major shareholders will domestic investors who have turned their eyes to overseas stocks have a reason to look back at the Korean market, and foreign investors who have focused on the undervaluation of Korean companies will have grounds to engage in long-term investment."
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