Moody's Investors Service says that Lotte Group's plans to acquire KT Rental (unrated) will not immediately impact Lotte Shopping's Baa2 ratings or stable outlook, but could pressure the ratings if its financial contribution to the transaction is material.
Lotte has been named the preferred bidder for KT Rental. The total acquisition cost has not yet been disclosed, but is expected to be shared among various Lotte Group entities.
"It is premature to assess the impact of the KT Rental acquisition on Lotte Shopping's credit profile and ratings, because the cost of the acquisition and Lotte Shopping's contribution to it have not yet been disclosed," says Yoon Wan-hee Yoo, a Moody's vice president and senior analyst. "However, the deal could pressure Lotte Shopping's ratings if its contribution turns out to be material, given its already high financial leverage," adds Yoo.
The acquisition could provide some synergies to Lotte Shopping, because it could cross-sell its retail products with KT Rental's auto-rental business.
However, the benefits from such synergies could be more than offset by the acquisition cost, depending on the size of Lotte Shopping's contribution.
Lotte has been named the preferred bidder for KT Rental. The total acquisition cost has not yet been disclosed, but is expected to be shared among various Lotte Group entities.
"It is premature to assess the impact of the KT Rental acquisition on Lotte Shopping's credit profile and ratings, because the cost of the acquisition and Lotte Shopping's contribution to it have not yet been disclosed," says Yoon Wan-hee Yoo, a Moody's vice president and senior analyst. "However, the deal could pressure Lotte Shopping's ratings if its contribution turns out to be material, given its already high financial leverage," adds Yoo.
The acquisition could provide some synergies to Lotte Shopping, because it could cross-sell its retail products with KT Rental's auto-rental business.
However, the benefits from such synergies could be more than offset by the acquisition cost, depending on the size of Lotte Shopping's contribution.
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