GS Retail and GS Home Shopping to merge

Models inside a GS25 convenience store. [GS RETAIL]

GS Retail, operator of GS25 convenience stores, is merging with GS Home Shopping to strengthen its online and offline businesses.

The two companies agreed to the merger during their board meetings held Tuesday morning, with the new entity to be formally established next year.

GS Holdings owns 65.75 percent of GS Retail and 36.10 percent of GS Home Shopping.

“GS Home Shopping’s business is centered online on mobile and television, while GS Retail’s businesses like GS25, Lalavla and GS The Fresh are focused offline,” said Kang Ji-seong, a spokesperson for GS Home Shopping. “So the merger would mean there will be more partners and sales channels without concerns for cannibalization.”

The swap ratio between the two companies will be 4.22 shares of GS Retail for one share of GS Home Shopping.

Market capitalization of GS Home Shopping stands at 939.8 billion won ($842.3 million), and 2.63 trillion won for GS Retail. GS Retail expects the merger would result in a company with 9 trillion won in assets. Lotte Shopping’s asset stands at around 33 trillion won.

GS Retail operates around 15,000 GS25 convenience stores, 320 GS The Fresh and six hotels, including Grand InterContinental Seoul Parnas. GS Home Shopping has 1,800 customers with memberships.

Following the transaction, the merged unit will be able to deliver food products purchased via GS Home Shopping the same day the order was placed through GS Retail’s cold chain system. GS25’s wines could also be sold on GS Home Shopping.

Their goal is to grow more than 10 percent annually following the merger.

“At times when there are management uncertainties and heated competition is projected, the two companies will focus on creating a bigger customer value by combining their strengths,” said GS Retail Vice Chairman Huh Yeon-soo.

Kim Ho-sung, president of GS Home Shopping, said the company will accept the changes in the retail industry heading towards digital commerce like mobile shopping to foster the company’s further growth.

BY JIN MIN-JI [jin.minji@joongang.co.kr]