[Click eStock] "Lotte Shopping, Synergy Expected in Distribution Division if Hanssem Acquisition Occurs"

IBK Investment & Securities Report

[Asia Economy Reporter Minji Lee] IBK Investment & Securities forecasted on the 13th that if Lotte Shopping completes the acquisition of Hanssem, it could create synergies with its distribution business division.

On the 9th, Lotte Shopping announced that it would invest 299.5 billion KRW in IMM PE, a special purpose company established to acquire a controlling stake in Hanssem. Hanssem is the leading home interior company in Korea and has solidified its business capabilities and market position over the past five years by reflecting the rapid rise in real estate prices and lifestyle changes due to COVID-19. Last year, its sales reached 2.0675 trillion KRW, and operating profit was 93.1 billion KRW, growing 22% and 67% respectively compared to the same period last year. IMM PE is pursuing a plan to acquire Hanssem for 1.3 trillion KRW, reflecting a 30.21% stake and a control premium.

If Hanssem’s merger and acquisition (M&A) proceeds smoothly, Lotte Shopping is expected to draw a blueprint for synergy linkage with its home appliance platform Lotte Hi-Mart and distribution channels. Ji-Young Ahn, a researcher at IBK Investment & Securities, said, “Considering that the value of Hanssem’s Bangbae-dong headquarters is about 500 billion KRW, this acquisition price is not burdensome and will be positive for the increase in value of Lotte’s distribution BU.” However, the pursuit of Hanssem’s acquisition is expected to delay the e-commerce strategy by dispersing group resources amid a slower digital transformation pace compared to peer groups.

The injunction filed by the second-largest shareholder opposing the acquisition also increases uncertainty. On the 10th, Teton Capital Partners, a US-based hedge fund and the second-largest shareholder of Hanssem, applied to the Ansan branch of Suwon District Court to prohibit any acts of cooperation in due diligence for determining sale conditions, including permits, assets, intellectual property rights, and major contracts. Researcher Ji-Young Ahn explained, “Lotte Shopping’s investment has encountered legal opposition from Hanssem’s second-largest shareholder, expanding uncertainty and increasing the possibility of M&A negotiation failure,” adding, “Lotte Shopping will reflect the momentum of corporate value increase when it swiftly concludes the acquisition of Hanssem.”

This content was produced with the assistance of AI translation services.