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Carrefour announces its preferred Korean bidders

French retail giant Carrefour has selected South Korean firms Lotte Mart and Samsung Tesco Homeplus as preferred bidders for its 32 outlets in South Korea, a Carrefour spokesman said yesterday.

Lotte Mart is a unit of South Korea's largest department store operator, Lotte Shopping, while Samung Tesco Homeplus is a joint venture between Samsung Group and Britain's Tesco Plc.

"Carrefour has picked Lotte Shopping and Homeplus as the two preferred bidders," said Yim Jin-Taek, the spokesman for Carrefour's public relations firm Saram and Image. He refused to disclose further details.

Carrefour, the fourth-largest discount store chain in South Korea and the world's second biggest retailer, announced last week that it was selling its outlets, ending months of speculation about a pullout from South Korea.

Analysts estimate the deal could be worth at least US$1.53 billion and that it will reshape South Korea's US$120 billion retail market.

Three South Korean retailers -- Lotte Mart, Homeplus and E-Mart -- and clothing maker Eland had been competing to take over the French firm's outlets.

Whoever takes over the Carrefour outlets -- either Lotte Mart or Homeplus, the final winning bidder will emerge as being right next to the country's largest discount retailer E-Mart.

E-Mart, affiliated with department store chain Shinsegae, leads the retailing industry in South Korea with 79 outlets and about a third of the market, followed by Samsung Tesco and Lotte Mart, in terms of sales.

However Lotte Mart ranks second to E-Mart in the number of outlets, at 43, with Homeplus third with 42.

Confirming in a stock market notice that it was one of the preferred bidders for Carrefour's operations here, Lotte Shopping rose 1.98 percent up to 412,000 won on the Seoul bourse.

Carrefour, which entered the South Korean market in 1996, has paved the way for the sale by concluding a deal with staff on job security. It has some 6,400 Korean employees.

The French retail giant is to sell out here in order to focus on China after poor performance in South Korea, South Korea's Yonhap news agency said.

Carrefour Korea said last week its net profit fell to 6.86 billion won (US$7.13 million) last year from 15.96 billion won in 2004.

Sales rose 4 percent to 1.67 trillion won but operating profit dropped 2.8 percent to 24.6 billion won. Its total assets stood at 1.58 trillion won.

Yonhap said yesterday one of the two preferred bidders was expected to negotiate a final deal with Carrefour "sometime next week" after additional due diligence on the French retail giant.

But Yonhap said the deal could be delayed if hidden debts are found or negotiations bog down over other terms and conditions.
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