Woori Financial’s MOU to buy Tongyang Life impacts Lotte Insurance stock

[Courtesy of Lotte Insurance]

Shares of Lotte Insurance saw a decline in morning trading on Thursday, following news that Woori Financial Group is pursuing the acquisition of Tongyang Life Insurance and ABL Life Insurance instead of Lotte Insurance. This development has raised concerns among investors about Lotte Insurance’s prospects as a potential acquisition target.

As of 9:18 AM, Lotte Insurance shares were trading at 3,840 won ($2.77), down 4.00 percent from the previous trading day. Earlier in the session, the stock fell as much as 8.75 percent to 3,650 won.

Woori Financial Group has been seeking to strengthen its non-banking sector by acquiring an insurance company. The group had participated in the preliminary bidding and due diligence for the public sale of Lotte Insurance. However, recent reports of Woori Financial entering into negotiations for the acquisition of Tongyang Life and ABL Life have led to a drop in Lotte Insurance’s stock price.

In response to an inquiry from the Korea Exchange regarding the reports on the potential acquisition of Tongyang Life and Lotte Insurance, Woori Financial confirmed that it has signed a non-binding memorandum of understanding with the major shareholders of Tongyang Life and ABL Life and is in discussions regarding the acquisition. However, Woori Financial clarified that no concrete decisions have been made yet.

Regarding the acquisition of Lotte Insurance, Woori Financial stated that the matter is still under review, with no specific decisions finalized to date.

Market analysts suggest that the signing of a non-binding MOU with Tongyang Life and ABL Life could be a strategic move by Woori Financial to strengthen its position in the final bidding for Lotte Insurance.

At the same time, shares of Tongyang Life were also affected, trading at 6,820 won, down 2.57 percent from the previous session.