Hyundai Department Store Group is to take over ‘real estate and tangible assets’ from Doosan Corporation including the Doota Duty Free store, according to a regulatory posting.

Hyundai Department Store Group is to take over Doosan Corporation’s Doota Duty Free store as part of a KRW61.9bn conditional acquisition, according to a regulatory posting seen by TRBusiness.

As reported, Doota Duty Free is to cease operations from 30 April 2020, joining Hanwha Group, which closed its Galleria 63 Duty Free business in Seoul this September. The most likely reasons for next year’s closure are a fall in Chinese group tourists, location of the store — Korean DF&TR business mainly revolves around the Myeongdong area— and intense competition.

Multiple local and international media reports had suggested Hyundai Department Store Group were in talks to take over the Doota Duty Free store following the announcement that Doota Duty Free is to cease operations.

According to today’s regulatory posting (12 November 2019) the ‘direct acquisition’ will be finalised on 28 February 2020 (this date is subject to change). It will include real estate (KRW44.7bn —$38.4m) and various tangible assets (KRW14.3bn) including the Doota Duty Free outlet. This is located in the Doosan Tower in Dongdaemum Seoul. The lease period is for five years from date of commencement with a possibility to extend.

The regulatory post containing details of the acquisition.

The regulatory document also states that Hyundai will pay KRW10bn during each year of the real estate lease and that the purpose of the acquisition is to ‘enhance business competitiveness’.

CONDITIONAL ACQUISITION

In order for the transaction to be finalised, Hyundai must obtain a licence to begin operations, as indicated in the document. This is because duty free licences in South Korea cannot be traded between operators, TRBusiness understands.

An industry source told TRBusiness prior to today’s big breaking news that Hyundai would most likely need to acquire one of the duty free licences set to be awarded by The Korea Customs Service this month. Should Hyundai obtain the licence, Doota would end operations as planned in April 2020 and Hyundai would begin trading under the new licence.

Reacting to news of the pending acquisition the same source commented: “The takeover will help Hyundai ensure economies of scale, resolve the uncertainty and seek a turnaround in the long-term. Can Hyundai improve performance on the same site as the existing Doota Duty Free store? Time will tell.”