Woori teams up with MBK for Lotte Card bid

By Jhoo Dong-chan

Woori Bank, the banking unit of Woori Financial Group, has joined an M&A race for Lotte Card by forming a consortium with MBK Partners, one of the three finalists bidding for the card firm.

The decision is believed to be part of the group's efforts to diversify its revenue portfolio.

Hana Financial Group is widely seen as the strongest contender in acquiring Lotte Card, but it has become a two-way race with the entry of Woori Bank.

“Woori Bank and MBK Partners formed a consortium to acquire Lotte Card,” a Woori Bank official said.

According to sources, under the consortium, MBK Partners will seek to secure a 60 percent stake in Lotte Card, and Woori plans to invest about 300 billion won ($257.6 million) to secure a 20 percent stake. Lotte Group will hold the remaining 20 percent.

But the Woori official immediately denied the allegations.

“We just formed the consortium to participate in the bid. Detailed equity structure has yet to be discussed. We will get into the details once we are selected as a preferred bidder,” he said.

Woori Bank's move is considered unexpected as industry sources alleged MBK Partners has shown a lukewarm attitude toward the takeover because of Hana's overwhelming cash reserves, but an MBK Partners official denied the claim.

“MBK Partners has been reviewing possible options regarding Lotte Card,” the official said. “It was not true MBK Partners gave up its bid for Lotte Card.”

The partnership with Woori Bank is likely to place the consortium at the forefront in acquiring Lotte Card with enough cash reserves and management capacity.

If Woori manages to merge its card subsidiary Woori Card with Lotte Card through the consortium, it will create Korea's third-largest card firm with assets worth 22.6 trillion won.

Woori Financial Group has been one of the most active players in the nation's M&A market since it turned itself into a holding company in January.

It was recently selected as a preferred bidder in acquiring Tongyang and ABL, the insurance duo owned by Chinese Anbang Insurance Group. The group also signed an MOU with Kukje Asset Trust Chairman Yoo Jae-eun to acquire the real estate trust.

Woori Financial Group posted a 568.6 billion won net profit in the first quarter of the year, outperforming Hana Financial Group's quarterly earnings of 556 billion won.

Lotte Card, a credit card unit of Lotte Group, has been put up for sale as the conglomerate stepped up to turn itself into a holding company.

Under related laws, an industrial holding company is banned from holding a majority stake in a financial unit to prevent owners of family-run business conglomerates from exploiting a financial unit as their private coffers.