SEOUL • South Korean prosecutors have raided the offices of Lotte Group, the country's fifth-largest conglomerate, and several of its affiliates, dealing a further blow to its hotel unit's planned IPO, billed as the world's biggest this year.
Hotel Lotte, one of the affiliates raided on Friday, cut the size of its initial public offering (IPO) to a maximum US$4.5 billion (S$6 billion) last Tuesday and pushed back the listing to next month after prosecutors launched a bribery investigation into a director.
And late on Friday, the group's Lotte Chemical Corp unit said it had withdrawn from the bidding for US-based Axiall Corp, which went to a rival suitor for US$2.33 billion, citing "the difficult situation Lotte has faced in Korea recently and heated competition".
About 200 investigators searched 17 locations including the group's headquarters in central Seoul and the homes of chairman Shin Dong Bin and other key executives, local news agency Yonhap reported, citing the Seoul Central Prosecutors' Office.
The raids mark a fresh bout of turbulence for Lotte, one of the best known of the big family-run conglomerates, or chaebol, that dominate Asia's fourth largest economy, after it was rocked by a bitter succession feud last year.
The raids mark a fresh bout of turbulence for Lotte, one of the best-known of the big family-run conglomerates, or chaebol, that dominate Asia's fourth largest economy, after it was rocked by a bitter succession feud last year.
A Lotte official, who declined to be identified, said Friday's raids had not been expected. It was unclear whether there was a direct connection with the bribery probe into Hotel Lotte.
Three people with direct knowledge of the matter told Reuters that the raids were part of an investigation into a possible slush fund. They also declined to be identified.
One person said prosecutors were also looking into possible breach of trust related to asset transactions among affiliates. Some executives had been barred from leaving the country, one of the sources added.
The Seoul Central Prosecutors' Office declined to comment.
A Lotte Group spokesman declined to comment on the reason for the raid, when asked whether it concerned a possible slush fund.
He noted, however, that the situation was difficult, given the IPO plans and Lotte Chemical's Axiall bid. "While cooperating with the investigation, we will do our best to operate normally," he said.