Lotte Shopping selected as strategic partner in Hanssem acquisition

Lotte Shopping was selected Friday as a strategic partner by IMM Private Equity in its acquisition of Hanssem.

Lotte Group Chairman Shin Dong-bin [JOONGANG PHOTO]

Lotte Shopping was selected Friday as a strategic partner by IMM Private Equity in its acquisition of Hanssem, Korea’s largest furniture brand.

Lotte Shopping agreed at a board meeting on Thursday to invest 299.5 billion won ($260 million) to join a bid by IMM Private Equity, a Gangnam, southern Seoul-based group, in acquiring roughly 30 percent of Hanssem.

IMM Private Equity agreed in July to buy nearly a third of Hanssem, or 30.21 percent, from Cho Chang-geol, the company’s CEO, and seven other affiliated parties, for around 1.5 trillion won, according to local media reports.

IMM has management rights over Hanssem from the share purchase.

IMM has been looking for a strategic investor since the agreement.

LX Hausys, an interior material company, competed against Lotte Shopping to become the strategic investor.

Lotte Shopping, a retail giant that operates department stores, discount marts and outlets, said it decided to invest in the fund because of the rapidly growing home interior market and Hanssem’s expansion of businesses that range from smart home services to rental businesses.

“We believe various synergistic effects can be created in terms of products, content and attracting customers” through the acquisition, Lotte Shopping said in a statement on Friday.

It added that buying shares in Hanssem is expected to help Lotte Shopping create a differentiated offline space and offer unique products to its customers.

Lotte Shopping said Lotte Himart and Lotte Engineering & Construction are some of the group’s firms that could enjoy benefits from Hanssem.

Lotte Shopping runs the Korean branches of British high-end furniture brand The Conran Shop.

Its rivals also operate furniture brands.

Hyundai Green Food, which owns 12 percent of Hyundai Department Store, owns 41.2 percent of Hyundai Livart, while Shinsegae Department Store operates Casamia, both furniture brands.

However, the acquisition is facing a legal challenge. The furniture company’s second-largest stakeholder, Teton Capital Partners, filed an injunction against the deal with the Suwon District Court on Friday.

According to a public filing by Hanssem, the Texan private equity firm has requested that the court ban Hanssem executives including CEO Cho from cooperating with IMM Private Equity’s due diligence of the furniture company.

This includes providing sensitive information such as licenses, the furniture company’s assets and intellectual property.

Teton Capital Partners owns 8.43 percent of Hanssem, the second largest after the 15.45 percent stake owned by Hanssem CEO Cho.

It has been reported that Teton Capital Partner is frustrated that its rights as a shareholder have been violated by the acquisition.

CEO Cho and other executives will be selling their stakes for 220,000 won per share, whereas Hanssem’s shares are currently being traded for between 100,000 and 110,000 won.

While Hanssem shares peaked at 149,000 won in July, they closed on Friday at 117,000 won. That was a 5.26 percent drop from Thursday.

Hanssem said the company’s board of directors will take legal action against the injunction.

BY JIN MIN-JI [jin.minji@joongang.co.kr]