TPG opens 831.7 billion won tender offer for remaining Lotte Rental shares

A control premium for the minority

TPG is offering minority holders the same 59,000 won a share that it paid Lotte Group for control. TPG said the aim is to give them the same price as the control transaction, reflecting the control premium. It intends to make Lotte Rental a wholly owned subsidiary and pursue a voluntary delisting, subject to the offer outcome and regulatory requirements.

TPG signed the share purchase agreement on 11 August. Payment and transfer of the 61.17% stake held by Hotel Lotte and Busan Lotte Hotel closed on 30 October. That stake cost about 1.3105 trillion won. Including the tender offer, TPG's total commitment to Lotte Rental reaches 2.1422 trillion won.

The offer is 11.5% above Lotte Rental's 5 November close of 52,900 won.

Lotte Rental was trading at 58,400 won at 9:08 a.m. on 6 November, up 10.4% and a 52-week high, 600 won or about 1.0% below the offer price.

Affinity Equity Partners agreed in March 2025 to buy 56.2% at 77,115 won a share. That valued Lotte Rental at 1.57 trillion won, 2.6 times the then price of 29,000 won. The Korea Fair Trade Commission blocked the deal after more than 10 months of review, citing competition with SK Rent-a-Car, which Affinity already owned. TPG's 59,000 won is below Affinity's 77,115 won. Lotte Group sold Lotte Rental as one of its key measures to restructure its business portfolio and improve its financial position, Herald reported.

Debt funds the tender offer

Lexicon borrowed the entire 831.7 billion won for the tender offer from KB Securities and Woori Bank. Lexicon signed the loan agreement on 27 October. It has a five-year maturity and a minimum fixed annual rate of 5.85%. The whole 61.17% stake carries a pledge registered on 30 October. The same is expected for shares bought in the offer. Borrowings cover close to 40% of the 2.1422 trillion won total.

Lexicon raised about 1.2059 trillion won on 29 October through a paid-in capital increase, issuing 1,205,925 shares at 1 million won each.

Of the tender funds, 166.3 billion won reached a KB Securities account on 4 November, and the remaining 665.4 billion won is due by 30 November.

Why funds want the last 38.83%

Sedaily's Signal reported that eight of nine deals involving listed Korean companies and global private equity funds between 2023 and 2026 were full tender offers aimed at delisting, or 88.9%. That method took Lock&Lock, Osstem Implant, Ssangyong C&E and Lutronic off the market. KKR's purchase of SK Eternix was the exception. Analysts cited by Signal describe full buyouts as a way to cut the fixed costs of a listing and remove friction with ordinary shareholders.

The filing did not fix a delisting method. It said Lexicon has no plans for a merger, split or business transfer after the offer. The specific delisting method will be decided once the tender results and related conditions are known.

President Lee Jae-myung has called for balance between protecting minority shareholders and avoiding a chill in the market. The government weighs a mandatory tender offer rule.

What happens next

The offer closes on 3 December. Settlement falls on 7 December, according to the filing. Lexicon set no minimum acceptance threshold and intends to buy all shares validly tendered. Lotte Rental runs long- and short-term vehicle rental, used-car sales and business equipment rental.