Lotte Shopping Co, South Korea’s biggest department store owner, has agreed to buy control of Times Ltd (時代) in a deal that values the Chinese supermarket operator at about US$625 million, two people with knowledge of the matter said.
Seoul-based Lotte Shopping will purchase a 72.3 percent stake in Times from chairman Kenneth Fang (方鏗) for about HK$5.50 (US$0.71) per share, 19 percent above Times’ latest traded price, and will make an offer for the rest of the company, the sources said, asking not to be identified because the talks are private.
Lotte Shopping beat China’s Wumart Stores Inc (物美商業集團) to clinch the biggest acquisition in the country by a South Korean company, data compiled by Bloomberg showed.
Lotte Shopping, which operates a department store in Beijing, will add 65 outlets in the world’s fastest-growing major economy with the purchase.
“Given the slower growth in the domestic retail industry, mergers and acquisitions in China will boost the market’s expectation for Lotte Shopping’s long-term growth,” CG Koo, an analyst at Samsung Securities Co, said in a note to clients yesterday.
Lotte Shopping fell 0.8 percent to 303,500 won (US$260) at 12:16pm on the Korea Exchange, while the mainboard Kospi lost 0.6 percent. The stock has gained 45 percent this year.
“We are currently in the final stage of talks with a positive stance, but we have no information on the size or the value of the stake,” said Lee Sun-dae, a spokesman for Lotte in Seoul.
Wumart, Beijing’s biggest supermarket chain, said on Sept. 24 it had held talks with Times.
Trading of Times shares were suspended on Oct. 12 in Hong Kong after rising to a two-year high, taking its market value to US$523 million.
Lotte Shopping said on Friday in a regulatory filing that it planned to invest an additional 732.7 billion won in its Hong Kong unit, which will use the proceeds to expand in China and Hong Kong.
Parent Lotte Group is expanding in China, India, Vietnam, Indonesia and Russia, seeking to tap rising affluence in developing markets. Lotte Shopping opened its first overseas department store in Moscow in 2007 before its Beijing outlet.
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