SOUTH KOREA. Lotte Duty Free has cleared a critical first hurdle in its planned acquisition of travel retail rival AK Duty Free, after the Fair Trade Commission (FTC) approved the takeover on Tuesday.
Lotte confirmed the FTC’s approval to The Moodie Report. But the company still has two more barriers to overcome before proceeding with the deal.
Next it needs the approval of Customs House, followed finally by that of Incheon International Airport Corporation in order to be able to take over AK Duty Free’s all-important cosmetics & fragrances concessions at Incheon International Airport.
A final deal is expected to take a further month to conclude.
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The main AK Duty Free beauty store at Incheon International Airport is brilliantly located immediately post the central security point and immigration. But profitability was hard hit in 2009 by the economic slump and onerous concession fees |
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If Lotte can gain approval for the deal it will operate both liquor & tobacco (above) and perfumes & cosmetics at Incheon |
As reported, AK Duty Free Shop generated some KW320 billion (US$274.62 million at 2009 exchange rates) in sales from its online shop and three branches in COEX, Incheon International Airport and Gimpo International Airport last year. Its Incheon operations suffered badly last year due to a combination of high concession fees and the severe downturn in the Korean economy but have bounced back in 2010.
SHILLA/PARADISE DEAL OFF
In related news The Shilla Duty Free’s planned acquisition of Busan-based Paradise Duty Free has failed.
Shilla Executive Vice President, Head of Duty Free Division Jason Cha confirmed to The Moodie Report that the deal was finally “off”. The breakdown in negotiations has been widely dscussed in Korean travel retail circles for several weeks.
Cha said there were “multiple reasons” for the breakdown, including unfavourable terms, protracted negotiations and resistance from Customs.
Paradise’s current license will expire this December.
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