Lotte Group has shown interest in joining hands with IMM to acquire Hanssem, the largest full-service interior company in South Korea. In a regulatory filing, Lotte Group was reportedly discussing partnering with IMM for the investment in the company. Although there haven’t been any specifications added to the Wednesday news, industry experts project the official announcement soon to be made.
The furniture market player had been taking a defensive stand avoiding huge investments in the past to minimize financial risks. However, it has now shown interest in expansions with the collaboration of IMM.
Earlier in July, IMM PE made an agreement with Hanssem’s CEO, Cho Chang-Geol, and seven other affiliated parties. At present, the company has a managing stake of 30.21%.
IMM PE had synergy plans with the complete acquisition of Hanssem. The company owns stakes in Oheim and Bucket Place, where Hanssem is an addition to the list. The collaborative deal with Lotte Group may show a different plan of action in the coming months.
A Lotte Group official spoke to Media on Sunday. “We are looking at Hanssem with keen interest. We are in discussions with IMM PE on the matter. However, nothing has been decided about when and how we will participate in the investment,” the spokesperson stated.
If the deal proceeds successfully, both firms will enter into an agreement for a deal with a special purpose company. As per the reports, Lotte may have a share of 30-40% in the deal.
Lotte owns the Conran Shop, a luxury brand from Britain in the furniture industry. The furniture market has bounced back and is growing exponentially after the pandemic hit the market last year. Owing to the current market trends, NH Investment & Securities Analyst commented that Hanssem “Deal is attractive considering the rise in interest in furniture following Covid-19.”
The news has created a lot of buzz in the industry. Another key industry expert expressed his views saying, “PEFs often resell companies three to five years after acquiring them. In order to make a successful exit, PEFs focus on increasing corporate value. For Hanssem, IMM PE may not obtain its short-term goal alone as the domestic furniture market is becoming saturated faster than expected, and it needs to spend a lot of money in marketing to expand the business both on and offline.”
The deal proceedings may speed up after the chairman of Lotte Group, Shin Dong-bin, returns to South Korea from his Japan business trip. It is expected to be completed by December this year. The estimated value of Hanssem is at around 1.5 trillion won, where IMM PE pays half. The remaining half will be Lotte and other investors.