Grasp of Management Power
Lotte Group Chairman Shin Dong-bin plans to list Hotel Lotte, which is considered a holding company of Lotte Group in Korea, on Korea's stock market on June 30, securing up to 5.7 trillion won (US$4.81 billion). Using the share sale, he is expected to simplify its ownership structure and raise the power in the group.
The listing of Hotel Lotte, which is at the height of the group’s governance structure, will come in nine months after Chairman Shin Dong-bin announced his plan for the initial public offering (IPO) when making a public apology over the succession feud in August last year. According to investment banking (IB) industry sources on May 17, Lotte Group confirmed the IPO plan which offers 35 percent of the entire stake in Hotel Lotte when listing the company on the stock market. The plan calls for existing major shareholders to sell a 10 percent post-listing stake, while a 25 percent stake, would be issued and offered to local investors.
Once Hotel Lotte is listed on the stock market, the control of Lotte subsidiaries in Japan over Hotel Lotte will be lowered from the current 99 percent to 65 percent, settling the controversy of the group’s “dubious” nationality.
The expected price range of its shares is from 97,000 won (US$82) to 120,000 won (US$101) per share and the final price will be determined according to the demand prediction of institutional investors. Therefore, the size of the IPO is estimated at from 4.7 trillion won to 5.7 trillion won (US$3.97 billion to 4.81 billion), When the offering price per share exceeds 103,000 won (US$87), Hotel Lotte will be able to break Samsung Life Insurance’s IPO record of 4.89 trillion won (US$4.13 billion) in 2010. In a bid to beat the record, Lotte Group delayed the date of the listing which was previously scheduled at the end of this month. Hotel Lotte IPO managers and IB market watchers expect that its market capitalization will be around 17 trillion won (US$14.35 billion) after the listing.