TPG wins antitrust approval to acquire Lotte Rental

The Korea Fair Trade Commission has approved the acquisition of Lotte Rental, South Korea's largest car rental company, by US-based global private equity fund manager Texas Pacific Group (TPG).

The Fair Trade Commission said Tuesday it approved the merger filing under which TPG affiliate Lexicon Korea Holdco will acquire shares in Lotte Rental.

Lotte Group signed a share purchase agreement with TPG on Aug. 11 to transfer a controlling stake in Lotte Rental. The sale covers a 38.1 percent stake held by Hotel Lotte and a 23.0 percent stake held by Busan Lotte Hotel, totaling 61.2 percent. TPG subsequently filed a merger notification with the Fair Trade Commission as required under the Fair Trade Act.

The commission determined that the deal raised no significant competition concerns, noting that the two parties operate in largely unrelated business areas.

TPG is engaged in private equity investment and infant nutrition products in South Korea, while Lotte Rental's core business is vehicle rental. The commission concluded that the two sides' operations have no substitutive or complementary relationship.

Under the Fair Trade Act, mergers that bring previously independent companies under a single controlling entity are in principle subject to a review of whether they restrict competition.

However, a merger may be exempted from a full review if no controlling relationship is formed after the share acquisition, or if the parties' businesses have negligible substitutive or complementary ties unlikely to restrict competition.

The decision contrasts with the commission's earlier rejection of Affinity Equity Partners' bid to acquire Lotte Rental. Lotte Group had pursued a sale to Affinity last year, but the deal collapsed after the Fair Trade Commission withheld approval.

The commission determined at the time that, since Affinity already owned SK Rent-a-Car, allowing it to also acquire Lotte Rental would likely restrict competition in both the short-term and long-term car rental markets.