JKL Partners and Shinhan Financial Group are negotiating the sale price of Lotte Insurance, with a potential public sale in August if talks fail, according to market sources. On the 23rd, Shinhan's CFO stated the group is reviewing various acquisition targets and that reaching a compromise may take time. JKL lowered its asking price to 1 trillion won, but Shinhan is concerned the valuation could breach its value-up policy, sources said. Shinhan's board approved up to 400 billion won in subordinated bond issuance the same day, which the market interprets as preparation for acquisition funding. The F&B M&A sector is accelerating as VIG Partners nears completion of the Bonchon sale to a foreign strategic investor.
JKL Partners and Shinhan Financial Group Negotiate Lotte Insurance Sale Price
JKL Partners, the majority shareholder of Lotte Insurance, initially planned to collect non-binding letters of intent (LOI) from potential buyers and launch a public sale in mid-August. However, Shinhan Financial Group, one of the leading bidders, expressed acquisition interest, and negotiations shifted to a bilateral price adjustment format between the two parties.
Korea Investment & Securities also submitted an LOI, but market observers note that Korea Investment has shown interest in most insurance assets currently on sale, including Yebyeol Insurance, making its commitment to Lotte Insurance less certain compared to Shinhan's.
A variable emerged on the 23rd during Shinhan Financial Group's second-quarter earnings conference call. The market expected more definitive comments on the Lotte Insurance acquisition, but CFO Jang Jung-hoon stated, "We are currently reviewing various assets in addition to Lotte Insurance," and "M&A decisions are difficult to make unilaterally, and finding a compromise may take time."
JKL revised its initial plan and lowered the asking price for Lotte Insurance to 1 trillion won, but Shinhan is reportedly concerned that even this price could violate the company's value-up policy. If price negotiations between Shinhan and JKL fail, JKL may proceed with a public sale starting in August as originally planned. However, few other credible buyers are known to exist, leaving uncertainty about whether a public sale would succeed.
Shinhan Financial Group Approves 400 Billion Won Subordinated Bond Issuance
Shinhan held a board meeting on the same day and approved the issuance of up to 400 billion won in subordinated bonds. The company did not disclose the purpose, but industry observers interpret the move as Shinhan preparing funding ahead of a potential Lotte Insurance acquisition.
BNP Paribas Cardif Life Sale Expected to Restart Pending FSS Decision
The market expects the sale process for BNP Paribas Cardif Life Insurance, another life insurer on the market, to resume in late July or early August. Cardif Life has faced regulatory sanctions from financial authorities over allegations of improper sales of variable insurance products related to the 2021 Hong Kong ELS incident. The Financial Supervisory Service's disciplinary decision is expected in August.
Korea Investment & Securities, which has shown interest in all major insurance assets released in the first half of this year, may eventually submit a serious bid for Cardif Life. Korea Investment selected Samjong KPMG as its due diligence firm in mid-2023 and conducted preliminary reviews.
Cardif Life's enterprise value is estimated at around 200 billion won, significantly lower than the trillion-won range of KDB Life, Lotte Insurance, and Yebyeol Insurance, reducing acquisition burden. Its total assets stand at 3 trillion won, ranking 20th among 22 life insurers.
F&B M&A Activity Accelerates as Bonchon Sale Nears Completion
The F&B M&A market is regaining momentum as the Bonchon sale nears completion. VIG Partners selected a foreign strategic investor (SI) as the preferred bidder, and the stock purchase agreement (SPA) signing is reportedly in its final stages.
Other F&B assets have adjusted their timelines while monitoring the fast-moving Bonchon deal, but with the transaction taking shape, follow-up activity is expected to accelerate next week.
A representative case is Nolangtongtag. Q Capital Partners pursued a sale to Philippine company Jollibee last year but failed to close the deal. Q Capital terminated its contract with Samjong KPMG, the previous sale advisor, and has been coordinating the timing of a request for proposal (RFP) issuance while observing the Bonchon sale outcome.
KLN Partners, the largest shareholder of Mom's Touch, is reportedly scheduling a preliminary bidding round in August. Citigroup Global Markets Securities serves as the sale advisor and is currently contacting potential buyers and conducting some early due diligence.
The sale of BKR, which owns brands including Burger King and Tim Hortons, is expected to gain momentum later this year. According to industry sources, Affinity Equity Partners is currently preparing an information memorandum (IM) and is not rushing the sale timeline.
FAQ
What is the current status of the Lotte Insurance sale negotiation?
JKL Partners and Shinhan Financial Group are in bilateral price negotiations after JKL lowered the asking price to 1 trillion won. Shinhan's CFO stated on the 23rd that the company is reviewing multiple acquisition targets and that reaching a compromise may take time. If negotiations fail, JKL may launch a public sale in August.
Why did Shinhan Financial Group issue subordinated bonds?
Shinhan's board approved up to 400 billion won in subordinated bond issuance on the 23rd without disclosing the purpose. Market observers interpret the move as funding preparation for a potential Lotte Insurance acquisition, though Shinhan has not confirmed this.
Which F&B companies are currently in M&A processes?
VIG Partners is finalizing the sale of Bonchon to a foreign strategic investor with SPA signing in progress. Q Capital Partners plans to issue an RFP for Nolangtongtag after the Bonchon deal closes. KLN Partners is scheduling a preliminary bidding round for Mom's Touch in August. Affinity Equity Partners is preparing an IM for BKR, which owns Burger King and Tim Hortons, with deal activity expected to accelerate late this year.
