This article was published on June 9, 2025, at 8:32 a.m. on the ChosunBiz MoneyMove site.
As Lotte Card proceeds with its sale process, it has come to light that majority shareholder MBK Partners has explicitly defined a 'prohibited buyer.' The contents state that Lotte Card cannot be sold to competitors of Lotte Shopping, specifically Shinsegae and Hyundai Department Store.
This is specified in the shareholder agreement between MBK Partners and second-largest shareholder Lotte Shopping (20% equity). Furthermore, Lotte Shopping has a tag-along right with MBK Partners, allowing it to request that if MBK Partners sells its management rights externally, its own equity must also be sold alongside. However, MBK Partners does not have a drag-along right regarding Lotte Shopping's equity. In other words, even if MBK Partners sells its management rights, Lotte Shopping retains the right to remain the second-largest shareholder. This decision reflects a high valuation of the business synergy with Lotte Card.
According to investment banking (IB) industry sources on the 9th, when MBK Partners acquired Lotte Card from LOTTE Corporation in 2019, they entered into a shareholder agreement that stated, 'Management rights cannot be sold to Shinsegae or Hyundai Department Store in the future.'
Such contract terms stem from the close relationship between Lotte Card and Lotte Shopping. The interdependence between Lotte Card and Lotte Shopping is high. According to industry sources, the share of Lotte Card payments within Lotte Department Store is reported to be around 50%.
An IB industry source noted, "In such a situation, if Lotte Card were to be acquired by a competitor of Lotte Shopping, purchase-related information such as consumer patterns and preferred brands of Lotte Department Store customers could transfer to the competitor from that moment."
Additionally, from the perspective of Lotte Department Store, the potential loss of card promotion mechanisms is significant. For instance, promotional events such as '10% discount or 12-month installment without interest when paying with Lotte Card' would virtually be impossible. Therefore, the measure to restrict the sale of Lotte Card to competitors of Lotte Shopping can be interpreted as a strategic defensive mechanism to protect the captive market.
Lotte Shopping also retains the right to remain as the second-largest shareholder even after MBK Partners sells its management rights. Generally, drag-along and tag-along rights coexist as a package. In the case of another second-largest shareholder, Shinhan Bank, both drag-along and tag-along rights exist with MBK Partners. However, in the case of Lotte Card, only Lotte Shopping has tag-along rights, and MBK Partners does not hold drag-along rights. In other words, MBK Partners cannot bundle the 20% equity of Lotte Shopping when selling its management rights to a third party.
An IB industry source stated, "This is due to Lotte Shopping's intention to 'not sell its equity to undesirable buyers.' Given the benefits that can be gained by using Lotte Card to protect the captive market, it is advantageous to remain the second-largest shareholder even after selling the management rights."
However, it has been reported that Lotte Shopping is also considering the option of selling some of its equity (exercising tag-along rights) during this management rights sale.