Taiwan Momo Home Shopping 10% stake
Acquired 17 years ago for 1.7 billion won
Realized a profit of 300 billion won by selling 2%
In 2004, Lotte Home Shopping sold a part of its stake in a Taiwanese home shopping company that it invested in, earning 300 billion won in valuation gains. When the value of the stake, which was secured at 1.7 billion won at the time, recently surged to 1.5 trillion won, part of the stake was sold to realize a profit. That is a 900-fold increase in the value of the stock in 17 years.
Lotte Home Shopping announced on the 30th that it had secured 295.2 billion won by selling a 2.1% stake (about 3.8 million shares) in Momo Home Shopping in Taiwan. After the sale, the remaining stake is 7.9% (about 14.42 million shares). If the market price is applied, the remaining valuation gains alone amount to 1.12 trillion won. According to the disclosure, the purpose of disposal is ‘realization of investment returns’. It is interpreted that the stock price soared due to the recent boom in the Taiwanese stock market, and it was interpreted that the company took some profit.
Woori Home Shopping, which Lotte Home Shopping acquired in 2007, acquired a 10% stake in Momo Home Shopping for 1.7 billion won in 2004. This was when Taiwanese Fubon Financial Group, the major shareholder of Momo Home Shopping, was recruiting early investors ahead of the launch of Momo Home Shopping. An official from the home shopping industry said, “Fubon Group sent love calls to domestic home shopping companies such as GS and CJ Group, including Woori Home Shopping, but many companies refused to enter overseas markets. I know you have decided,” he said.
Momo Home Shopping has maintained the No. 1 position in Taiwan TV home shopping since 2008. After being listed on the Taiwan Stock Exchange in 2014, it surpassed 1 trillion won in sales for the first time in 2016. Last year’s sales were 2.67 trillion won, up 30% from the same period last year. Lotte Home Shopping has been helping Momo Home Shopping by transferring information technology (IT) and operational know-how in the early days of its establishment.
The early disposal of shares in Lotte Shopping is in the air for Lotte Home Shopping’s ‘jackpot’. Lotte Shopping invested 36 billion won in Momo Home Shopping in 2012 to secure a 5.2% stake, but sold all of its shares for about 150 billion won last year. The stake was disposed of before the share price of Momo Home Shopping soared. After China’s THAAD (high-altitude missile defense system) retaliation, overseas business was sluggish, so it sold its stake in Chinese Home Shopping in addition to Momo Home Shopping.
Luck also played a role in Lotte Home Shopping’s jackpot. Lotte Home Shopping also considered selling its shares in Momo Home Shopping, but decided not to sell it. This is because the consultation procedure with Taekwang Group, the second largest shareholder of Lotte Home Shopping, is necessary, and Momo Home Shopping’s online mall ‘Momo.com’ has grown rapidly due to the COVID-19 crisis. A Lotte Home Shopping official said, “Last year, Momo.com saw its size grow rapidly like Korea’s Coupang, so we decided to hold the stake for the time being.”
Reporter Noh Yoo-jeong/Cha Jun-ho yjroh@hankyung.com
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