Lotte gets green light to acquire Hi-Mart

By Park Si-soo

Lotte Shopping is set to become the leading player in the home appliance market as the country’s anti-trust regulator Monday approved the company’s acquisition of Hi-Mart.

The decision comes nearly four months after Lotte sought approval for the purchase from the Fair Trade Commission (FTC) in early July. The FTC delayed its endorsement for fears that the acquisition of the two retail outlets could restrict free competition of the home appliance retail market. While Lotte owns 12 stores, Hi-Mart is Korea’s top home appliance retailer with 314 shops nationwide. Its 3.4 trillion won in sales last year exceeded the combined sales of its two biggest rivals, run by Samsung Electronics and LG Electronics.

“We’ve reached a conclusion that the acquisition will not dent free competition in the market,” the FTC said in a statement. “But we will stay vigilant over any market distortion by the purchase.”

The conclusion is based on the FTC’s analysis of 27 regions to measure changes in market share after the deal, the stores’ proximity to other competitors and possible price hikes caused by their increased market influence.

Lotte Shopping signed a deal to purchase a controlling stake in Hi-Mart from the latter’s three major stakeholders in early July. Under the deal, Lotte Shopping will acquire a combined 65.25-percent stake in Hi-Mart for 1.25 trillion won, or 81,000 won per share.

Hi-Mart will host a board of directors meeting soon to change its name to Lotte Hi-Mart and appoint Lotte Shopping head Noh Byung-yong as a board member, according to Hi-Mart officials. Lotte officials said retail stores of the two companies will run under the new name but they will operate independently for a while.

“We’ve decided to run the two separately for a while in order to buy time during which staffers of the two firms get familiar with each other,” a Lotte official said. “Hi-Mart has a long-established sales network as well as corporate culture. If the two are put together without enough time for transition, it would cause clashes.”

The official said the acquisition will give Lotte momentum in overseas expansion.

“Lotte will take advantage of Hi-Mart’s established sales network and know-how to have a bigger presence in the Southeast Asian market,” the official said. “A concrete plan of the strategy will be announced soon.