SEOUL (REUTERS) - South Korea's embattled Lotte Group said on Thursday (Oct 12) that several firms have expressed interest in acquiring its Lotte Mart stores in China and that is aiming for a sale by the end of this year.
The country's No. 5 conglomerate decided to bow out of the business after most of its hypermarkets and supermarkets in China were shut down amid political tensions between the two nations.
"We are in detailed talks with some of those companies," Lotte Corp executive vice-president Lim Byung Yun said at a news conference to mark the launch of the group's new holding company.
The size of the deal is expected to be small at a couple hundred million dollars, a banking source said, declining to be identified as the talks were confidential. Goldman Sachs has been picked to managed the sale.
Lotte, already reeling from internal power struggles and a corruption scandal, has been particularly hard hit by the political friction after it agreed to hand over land for a US-made missile defence system - a plan that has angered Beijing which argues the radar can penetrate far into its territory.
But even before the disputes, Lotte's Chinese hypermarket operation had been generating operating losses of well over 100 billion won (S$119 million) per year for the past three years, Fitch Rating said in report last month (September).
Listing the group's Hotel Lotte unit will take time, Lotte Corp executive Lee Bong Chul said, noting that the political tensions have reduced the number of Chinese tourists visiting South Korea, hurting sales of both its hotel and its duty free businesses.
The offering was delayed following a corruption scandal involving Lotte Group chairman Shin Dong Bin. He is on trial after prosecutors indicted him and other executives on embezzlement and other charges. Shin has denied the charges.
Before the scandal and decline in Chinese tourist numbers, the IPO had been expected to worth around US$4.5 billion (S$6 billion).
A power struggle between Shin and his elder brother Shin Dong Joo put pressure on the conglomerate to improve corporate transparency, prompting it to form the new holding company Lotte Corp which will make its debut on South Korea's main stock market on Oct 30.
Lotte Corp plans to look at acquisition opportunities in food businesses in emerging markets such as Myanmar and India, while it is also considering purchases of overseas hotels.