Lotte Card draws bid from Hana as key candidates back off

South Korea's Lotte Card Co. has drawn preliminary bids from Hana Financial Group, a leading banking group in the country, and two to three unidentified candidates by the Wednesday deadline, according to people familiar with the matter.

MBK Partners has put a 59.38% stake in Lotte on the market, which it hopes to fetch over 3 trillion won ($2.5 billion), or more than twice its 1.4 trillion won investment. 

Back in 2019, it purchased the majority stake jointly with Woori Financial Group, a close rival of Hana Financial.

Hana is looking to beef up its non-banking business through an acquisition of the country’s No. 5 card issuer. In 2019, it lost to a consortium of MBK and Woori Financial in a competition to buy Lotte Card from its parent Lotte Group.

But this time around, the credit card firm failed to drum up interest from other potential bidders such as telecom operator KT Corp., Woori Financial Group, fintech app Toss and Kakao Bank, an internet-only bank.

Woori had been deemed the most likely buyer. As Lotte Card’s No. 2 shareholder with a 20% stake, it was granted an option to buy the entirety of MBK’s shares in Lotte Card ahead of other bidders. But the banking group prioritizes buying a securities company.

Lotte Group has the remaining 20% stake in the credit card unit.

Earlier this year, KT entered into preliminary talks with MBK to buy Lotte Card. The credit card firm was expected to create synergy with BC Card Co., the country’s largest payment processing company, 70% owned by KT. But it decided not to make an offer.

Toss and Kakao Bank, a unit of the country’s dominant messaging app, were also speculated as possible bidders for Lotte as they are trying to secure a credit card business license.

But both internet-based companies are understood to be shifting toward directly obtaining the relevant license instead of chasing Lotte Card, which appears too expensive.

Since its acquisition, MBK has restructured Lotte Card's business and applied digital technology to its business and operation processes, alongside aggressive marketing efforts.

Lotte Card’s net profit jumped nearly threefold to a record 225.7 billion won in 2021, compared with 71.4 billion won in 2019. Its first-half net profit soared 63.2% on-year to 177.2 billion won.

But the estimated valuation is deemed too high for a domestic credit card firm with a market share below 10%, or 9.32%.

Meanwhile, MBK founder and Chairman Michael ByungJu Kim has pledged to donate $10 million to the Metropolitan Museum of Art, the museum said on Tuesday.

Write to Si-Eun Park, Chae-Yeon Kim and Jun-Ho Cha at seeker@hankyung.com
Yeonhee Kim edited this article.