- Published 2026.10.30 11:21
Acquisition of Lotte Centum City store estimated at around 200 billion won
Limited credit impact due to strong cash generation at both companies
FTC review outcome and investment costs for complex development to be confirmed
Shinsegae (CEO Park Joo-hyung) is acquiring the Busan Lotte Department Store Centum City branch from its long-time rival Lotte Shopping. As the 17-year "Centum battle" between the two retail giants ends in Shinsegae's victory, Korea's credit rating industry assessed that the impact of this big deal on credit ratings will be minimal, citing the companies' strong financial resilience.
Shinsegae and Lotte Shopping signed a transfer agreement for Lotte Department Store Centum City on Oct. 29 and submitted a business combination report to the Fair Trade Commission (FTC). The exact acquisition price was not disclosed by agreement between the two companies, but the market estimates it at around 200 billion won (about $148 million). NICE Credit Rating, in a report on Oct. 30, based this estimate on the store's total book value of 205 billion won (about $151 million) and the final bid price of 250 billion to 300 billion won (about $221 million) when the sale was pursued in 2024.
This store transaction is the result of fierce cutthroat competition in Busan's core commercial district. Lotte Centum City, which opened in 2007, suffered severe revenue decline after Shinsegae Centum City, the world's largest department store, opened right next door just two years later in 2009. As of 2025, Shinsegae Centum City ranked third nationwide with revenue of 2.2642 trillion won (about $1.7 billion), while Lotte Centum City remained at 62nd with 135.2 billion won (about $100 million). It failed to secure profitability, losing out to Shinsegae's overwhelming store size, luxury brand lineup, and experiential leisure facilities.
Ultimately, the first-ever direct store transaction between retail rivals has clearly divided the two companies' offline survival strategies. Shinsegae plans to physically connect the acquired Lotte store with its existing Centum City store to significantly expand the store size. Furthermore, it plans to combine this with a luxury hotel, residences, and offices on the adjacent C site, scheduled to break ground in the second half of next year, to create "Shinsegae Town," a mega-complex commercial district integrating shopping, living, and work.
Lotte Shopping, on the other hand, opted for selective restructuring by shedding chronically loss-making stores. After the sale, Lotte Shopping plans to focus investment on clearly competitive regional core bases such as its Busan main branch, which has grown to 11th nationwide with a high share of foreign customer sales, and Lotte Mall Dongbusan.
Despite the large transaction involving hundreds of billions of won, the financial structures of both companies are expected to remain largely unaffected. NICE Credit Rating assessed that both companies can defend against downward credit pressure based on their excellent cash generation capabilities.
Jeong Jin-won, senior researcher at NICE Credit Rating, analyzed that Shinsegae holds about 1 trillion won (about $738 million) in cash and cash equivalents on a consolidated basis in the first half of this year and has excellent financial stability with a debt ratio of 121.2%, so the impact of the acquisition payment on its credit rating is limited. For Lotte Shopping, he noted that its debt ratio of 124.9% indicates solid financial stability, and the proceeds from selling underperforming stores will be used for existing store renovations, new store openings, and investment in the Ocado logistics center in the United Kingdom, enabling stable management of financial burden.
However, there are still hurdles to overcome before the mega-complex commercial district, touted as a "Korean version of Roppongi Hills," becomes a reality. First, the FTC's business combination review must be passed for the final transaction to close, and Lotte Centum City will continue normal operations until the review is completed.
The most important indicator to watch is the massive new investment costs both companies will bear after the sale. Shinsegae must pour astronomical funds into renovating the entire acquired Lotte Centum City store and developing the C site complex, so its mid- to long-term cash flow and profitability defense need to be monitored. For Lotte Shopping, the results of full-store renovations centered on profitable stores and new shopping mall construction will likely serve as benchmarks for the future earnings power of its department store division.
(Dollar figures are approximate, converted automatically at 1,000 won = $0.738, the rate on Nov. 8, 2026.)
※ This article is an AI translation of the Korean original published by Korea Credit News; it was checked by automated quality guards and published by the English edition desk.
