Quick Take: Lotte receives rock-bottom bids for China stores
Struggling South Korean retail giant Lotte Group has made little headway in selling its Chinese stores, as it has continued to receive lower-than-expected offers.
After the group said it will sell its Lotte Mart hypermarkets, a discount-store chain in China, it has held talks with companies that include Thai peer Charoen Pokphand Group Co. Ltd. and firms from the United States and Europe, but received bids 30% lower than its book value of 830 billion won ($735 million), South Korea’s Yonhap News Agency reported.
Buyers know that Lotte is at a disadvantage as it wants to dispose of the assets quickly, and therefore offers have been low, Yonhap reported, citing a source in the investment banking sector.
Consumer ire toward Lotte rose in China after the company agreed to provide land on a golf course for Seoul to deploy the U.S.’ Terminal High Altitude Area Defense anti-ballistic-missile system, which Beijing opposes on security grounds. Chinese citizens have protested by shunning Lotte stores, while local authorities have upped their safety and sanitation inspections of Lotte Marts.
So far, 87 of the 112 Lotte Marts in China have closed.
Lotte has seen its China retail business plummet amid the backlash, with revenue generated by its hypermarkets in China down nearly 95% to 21 billion won in the second quarter. Overseas Lotte Marts, 66% of which were in China, reported a loss of 55 billion won.
Contact reporter Coco Feng (firstname.lastname@example.org)
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