Doosan, Shinsegae Surge on Winning Korean Duty-Free Licensesby and
Hotel Lotte, SK Networks lose current licenses to the duo
Loss of license may hurt Hotel Lotte's planned early-2016 IPO
Doosan won the license for a duty-free outlet in Seoul currently held by Hotel Lotte Co., while Shinsegae was awarded one held by SK Networks Co., according to an e-mailed statement from the Korea Customs Service on Saturday.
Doosan and Shinsegae jumped as much as 20 percent and 13 percent respectively, before trading 2.8 percent and 3.1 percent higher as of 10:45 a.m. local time. Lotte Shopping Co., 8.8 percent owned by Hotel Lotte, fell 4.8 percent while SK Networks plunged 18 percent, its biggest decline on record.
Losing a license for a Seoul outlet is a setback to Hotel Lotte, part of retail giant Lotte Group, as the duty-free business is its “most lucrative and important,” Heo Pil Seok, chief executive officer of Midas International Asset Management Ltd., said before the announcement. The world’s third-largest operator of duty-free shops is planning for a public listing next year.
Hotel Lotte’s licenses that were up for grabs include one at the company’s outlet in central Seoul, which account for 47 percent of the company’s duty-free sales, and another in southeast Seoul that represented about 10 percent. Lotte retained its license to operate the bigger shop in central Seoul, according to the statement. Tax-exempt retail contributed more than 80 percent of annual sales last year, according to Hotel Lotte.
The loss of one of Hotel Lotte’s licenses, which were due to expire by the end of this year, comes amid a power struggle between Lotte Group Chairman Shin Dong Bin and his elder brother. The retail conglomerate is seeking to raise 7 trillion won ($6 billion) selling 35 percent of Hotel Lotte, MoneyToday reported last month, in a public offering the chairman hopes to complete by the first half of 2016.