Lotte Group, which earlier this week scrapped what might have been the world’s biggest initial public offering (IPO), said more of its deals are under threat as the fallout spreads from widening investigations into the South Korean conglomerate.
The probes have disrupted business activities, while negotiations with companies in North America and Europe have been halted or delayed indefinitely, the group said in a statement.
For example, its Hotel Lotte Co unit was in discussions with as many as five companies from Europe, the US and Australia, but such large investments are now difficult to make in light of the probes and the shelved IPO, it said.
The group, still reeling from a feud that tore its founding family apart last year, sank into deeper turmoil on Friday last week as South Korean prosecutors widened probes into the business empire amid allegations of slush funds and embezzlement. The probes led its hotel unit to end a potential US$4.5 billion IPO, while its chemicals arm withdrew plans to buy Axiall Corp.
Hotel Lotte ended talks to buy a US duty-free-shop operator valued at about 1.7 trillion won (US$1.4 billion) and gave up on deals to buy hotels in the US and France, Yonhap news agency reported yesterday, without citing anyone or naming the target companies.
Lotte Group’s plans to buy Hyundai Logistics Co has also been suspended and one of its units canceled a bond sale, Yonhap said.
Lotte had been planning to use about 1.79 trillion won of the proceeds from the hotel unit’s IPO for acquisitions, according to the statement.
Meanwhile, the raids continued. Lotte Engineering & Construction Co’s offices in Seoul were among 15 Lotte-linked locations searched yesterday as prosecutors launched a second round of raids, according to Yonhap.
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