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Lotte Rent-a-Car Seoul Station Branch. (Photo = Lotte Rental) |
[Alpha Biz= Paul Lee] Global private equity firm Affinity Equity Partners has entered renegotiations with Lotte Group to lower the acquisition price of Lotte Rental, as it faces mounting pressure to divest SK Rent-a-Car to secure regulatory approval, according to an exclusive report by ChosunBiz.
According to investment banking sources, Affinity recently proposed a downward adjustment to the agreed purchase price and is currently in detailed negotiations with Lotte Group. The firm has yet to submit formal remedies to the Fair Trade Commission (FTC).
The renegotiation stems from the FTC’s earlier decision. In late January, the regulator effectively blocked Affinity’s acquisition of Lotte Rental, reportedly requiring the firm to divest its entire stake in SK Rent-a-Car—the No. 2 player in the market—as a structural remedy to proceed with acquiring market leader Lotte Rental. Affinity’s refusal to accept the condition led to the deal being denied.
Affinity now appears to have concluded that selling SK Rent-a-Car is unavoidable to complete the Lotte Rental acquisition.
The key challenge lies in SK Rent-a-Car’s valuation. Affinity acquired a 100% stake in SK Rent-a-Car in 2024 for approximately KRW 820 billion, a price that had already drawn criticism as being overly high relative to the company’s earnings and assets. Market estimates suggest its fair value may be closer to KRW 600 billion, implying that a swift sale could result in losses amounting to several hundred billion won.
Such losses could trigger backlash from limited partners (LPs) in Affinity’s fund, increasing pressure on the firm. As a result, Affinity is seeking to offset potential losses from the SK Rent-a-Car divestment by lowering the acquisition price of Lotte Rental.
Affinity had originally agreed to acquire Lotte Rental shares at KRW 77,115 per share, representing a management control premium of more than 160% compared to the market price at the time (approximately KRW 29,000). The stock is currently trading around the KRW 30,000 level.
The firm is reportedly arguing that the original valuation assumed synergies from owning both the No. 1 and No. 2 players in the market—an assumption that no longer holds if SK Rent-a-Car must be sold.
Lotte Group is said to be weighing the proposal carefully. While the group is under pressure to secure liquidity and advance its business restructuring through the sale of Lotte Rental, maintaining the originally agreed valuation may prove difficult under current market conditions.
Given the limited pool of potential buyers willing to match Affinity’s initial offer, Lotte Group may ultimately opt for a price concession to ensure the deal proceeds.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
