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Woori Financial opts against Lotte Insurance acquisition
Woori Financial Group headquarters in Seoul / Yonhap
By Lee Kyung-min
Woori Financial Group decided not to pursue its acquisition of Lotte Insurance, a non-life insurer, due to the high price, market watchers said Friday.
Explaining the widely expected development is JKL Partners' 77 percent stake in Lotte not budging on the 3 trillion won ($2.1 billion) acquisition price. The private equity firm said Lotte's market cap of over a 1.1 trillion won premium justifies the hefty price tag. But Woori made it clear that 2 trillion won was its bottom line.
“We reviewed the acquisition of Lotte Insurance shares to fortify the group's non-banking business, but we have decided not to consider the acquisition," the group said in the Financial Supervisory Service online disclosure filings.
Woori is expected to turn its focus to the acquisition of Tongyang Life Insurance and ABL Life Insurance, as indicated by the same filing.
“We will disclose details of our efforts to acquire Tongyang Life and ABL Life in a month or as soon as specifics are finalized.”
Many say Woori’s Wednesday announcement on its Tongyang and ABL acquisitions without withdrawing from the Lotte deal was a last-minute tactic to bolster pricing negotiations with JKL Partners.
Meanwhile, the failed deal would have added significant value to the group, whose first quarter net income came to 824 billion won. About 92 percent of the total came from Woori Bank.
Lotte Insurance registered a net income of 301.6 billion won last year, far greater than Woori’s capital, card, or asset trust subsidiaries with only 128.2 billion won in net income.
The figures for Tongyang and ABL were limited to 270.6 trillion own and 79.9 trillion won, respectively, last year.
“It is all about the price,” a Woori official said. “As attractive as any entity may be, an acquisition is out of the question if the price is not right.”