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Lotte beefs up logistics capabilities, says it seeks mergers

PUBLISHED : June 26, 2017 - 17:28

UPDATED : June 26, 2017 - 17:28

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[THE INVESTOR] Lotte’s parcel delivery service Lotte Global Logistics is seeking to find new avenues for growth after acquiring large-scale investments, sparking speculation about a merger with another Lotte affiliate to increase its presence in the highly competitive parcel delivery market.

This year, Lotte Global Logistics, which was acquired by Lotte from Hyundai Group last year, landed two large-scale capital infusions including a 300 billion won ($264 million) investment arranged by private equity operator Medici Investment.

In a statement following a capital increase of 150 billion won with consideration in May, Lotte Global Logistics said that it was looking to use the funds to expand its infrastructure and pursue mergers.

In order to increase its delivery volume and compete against market leader CJ Logistics, some say that Lotte Global Logistics may merge with Lotte’s one-stop logistics service provider Lotte Logistics. Lotte Logistics already handles logistics services for Lotte’s affiliates.

With roughly a 12 percent market share according to industry estimates, Lotte currently falls far behind CJ, which holds more than 44 percent. 

According to news reports, business with other Lotte companies makes up just 5 percent of Lotte Global Logistics’ revenue. If the two companies merge, it may increase delivery volume while also streamlining logistics arrangements for Lotte’s various companies.

A Lotte Global Logistics spokesperson said that there “were no ongoing discussions regarding a merger between the two companies,” and declined to comment further. 

By Won Ho-jung/The Korea Herald (hjwon@heraldcorp.com)

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