[Edaily Marketin Song Seung-Hyeon Reporter] The sale of Lotte Rental has entered its final stages with the signing of a share purchase agreement (SPA). The only remaining hurdle is the Fair Trade Commission’s review of the business combination. Since the business combination review previously held up the deal with Affinity Equity Partners, all eyes are on whether it will pass this time.

According to investment banking (IB) industry sources on the 25th, Hotel Lotte and Busan Lotte Hotel signed an SPA on the 11th to sell a 61.18% stake (22,212,063 shares) in Lotte Rental to Texas Pacific Group (TPG) for 1.3105 trillion won. This amounts to approximately 59,000 won per share. TPG established Lexicon Korea Holdco, a special purpose company (SPC), to act as the buyer, and it is reported that the company plans to close the transaction within the year following a merger review.

The general market outlook is that the review will pass without issue, as the reasons that previously blocked the Affinity Equity Partners deal do not apply to this transaction. On January 26, the Fair Trade Commission prohibited Affinity from acquiring a 63.5% stake in Lotte Rental. The commission determined that, since TPG already owned SK Rent-a-Car—the second-largest player—acquiring the market leader would result in a combined market share ranging from 21.3% to 38.3% across various segments, creating an excessive gap with third-place and lower-ranked operators. The agreement between Affinity and Lotte was terminated last May. Since TPG has no domestic car rental assets, this type of horizontal merger scenario does not apply to it.

However, some observers note that the scope of the review is not entirely empty. TPG has invested approximately 600 billion won in two separate rounds—in 2017 and 2021—and is now the second-largest shareholder in Kakao Mobility. This effectively creates a structure where TPG holds a taxi-hailing platform on one side and the top car rental operator and a car-sharing service (Green Car) on the other. Analysts note that the outcome of the review could vary depending on whether the car rental market and the ride-hailing platform are viewed as separate markets or as adjacent markets that overlap in terms of mobility demand.

Although the possibility of integrating the ride-hailing platform with Lotte Rental’s vehicle assets has been discussed—given that TPG is Kakao Mobility’s second-largest shareholder—the prevailing view is that this scenario is unlikely to materialize. The primary reason cited is that TPG has yet to secure an exit opportunity, even as it enters its ninth year of investment.

A domestic IPO has effectively been blocked due to controversy over dual-listing regulations, and an attempt to sell management control has already fallen through once. Uncertainty also remains regarding the American Depositary Receipt (ADR) listing currently being pursued, as Kakao, the largest shareholder, has been reluctant to proceed. This suggests there is little room to design medium- to long-term business synergies by bundling assets that require urgent recovery with newly acquired assets. If the combined effects—which form the basis for concerns about anti-competitive practices—are unlikely to materialize, there will be fewer issues likely to cause problems during the review.

Another point of interest is that Sejong Law Firm is handling the merger review. Sejong was the firm that handled the final stages of the Affinity case. Initially, Pacific Law Firm was providing counsel, but after the Fair Trade Commission (FTC) signaled its intent to reject the merger, Affinity switched its legal counsel to Sejong. Although they were unable to overturn the decision, the team has the advantage of having firsthand experience with what materials the review division requested and why certain corrective measures were not accepted.

However, the perception that the FTC has become less predictable remains a source of concern. Although the FTC initially introduced the corrective measure submission system with the aim of expanding companies’ right to defense, in the Affinity case, it issued a decision for a complete ban rather than conditional approval, even after consultations. At the time, the market did not view the possibility of the FTC’s disapproval as high. In particular, the FTC considered it difficult to guarantee the effectiveness of behavioral remedies given the nature of private equity funds, which typically involve a sale after a certain period. This decision can also be interpreted as signaling that the FTC intends to scrutinize business combinations involving private equity funds even more closely.

A legal expert stated, “Since the Lotte Rental case does not involve significant factors restricting competition, I expect the outcome itself to be favorable,” but added, “However, given that a private equity fund is the acquiring entity, there is a possibility that the Review Bureau will scrutinize the materials more closely. For TPG, which aims to conclude the matter within the year, it is difficult to rule out the possibility of a delay in the schedule.”