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South Korea’s Lotte Group got rid of financial units to meet local regulations by selling stakes in Lotte Card and Lotte Non-Life Insurance.

Lotte Corp., holding entity, in a disclosure said the board approved the sale of a 79.83 percent stake or 59,664,814 shares in Lotte Card for 1.38 trillion won ($1.16 billion) to the consortium of MBK Partners and Woori Bank. MBK would take up about 60 percent of the 79.83 percent stake and Woori Bank 20 percent, according to market sources. Lotte’s holding would shrink to 13.95 percent.

The group also struck a stock purchase agreement (SPA) last Friday to hand over 53.49 percent stake in Lotte Non-Life Insurance to JKL Partners, a move that cuts down Lotte’s shareholding in the insurer to 5 percent.

The country’s fifth largest conglomerate that adopted a holding structure in October 2017 is required to unload its financial units by October this year to meet the non-financial holding structure guidelines under the local fair trade law.

Lotte said the buyers agreed to guarantee job security of the employees of Lotte Card and Lotte Non-Life Insurance after the acquisition. As a minority shareholder, Lotte will continue to cooperate with the buyers to improve competitiveness of the financial companies and enhance customer value, it added.

The takeover deal also raised possibility for Woori Financial Group Inc. to buy Lotte Card from MBK Partners, which would shake up the financial industry. Woori Financial that raked in 568.6 billion won in net profit in the first quarter ended March this year reclaimed the third place in the industry after beating Hana Financial Group who recorded 556 billion won in net profit over the same period.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]