Lotte Said to Withdraw $4.5 Billion Hotel IPO Amid Probes

  • Hotel Lotte IPO could have been South Korea’s largest ever
  • Family-run conglomerate subject of widening investigations

Hotel Lotte May Shelve $4.5B IPO

Lotte Group is shelving what could have been the world’s biggest initial public offering this year, according to people familiar with the matter who asked not to be identified as the information is private.

Lotte is expected to announce withdrawing its application for Hotel Lotte IPO after the market closes, one of the people said. The decision comes as the South Korean conglomerate faces widening investigations into allegations of slush funds and bribery.

A Lotte Group spokesman declined to comment.

The IPO withdrawal is the latest blow to hit the conglomerate, which has 89 Korean units with more than 100 trillion won ($85 billion) in assets. With the group still reeling from a feud that tore its founding family apart, Lotte sank into deeper turmoil last week as Korean prosecutors widened their probes into the business empire amid allegations of slush funds and embezzlement.

All of Lotte’s eight listed units fell in Seoul trading, losing a combined market value of 1.2 trillion won this morning. Stocks are falling because of the probe, according to Kookhee Han, an analyst at NH Investment & Securities Co.

The latest probes came days after another investigation -- one looking into possible bribery -- led Hotel Lotte to delay the IPO and scale back its proposed price range. At the high end, the maximum $4.5 billion offering would still have been the world’s largest so far this year and the biggest ever in Korea.

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