South Korean retail giant Lotte Group said Thursday it has signed a 1.02 trillion won ($906 million) contract to buy a car rental service firm, seeking to diversify its business portfolio.

Lotte said it will fund the purchase of KT Rental Co. by May. 

Lotte was selected in mid-February as the best fit to buy the country's largest car rental firm, an affiliate of KT Corp., the nation's No. 2 mobile operator.

The group, whose businesses stretch from retail and finance to tourism and hospitality, has indicated it aims to further expand by taking KT Rental under its wing as a new growth engine.

KT Rental is 58 percent owned by its parent firm, with the rest held by strategic investors and minority shareholders.

The deal, expected to fetch 772.1 billion won for KT, will help the mobile operator ease its financial burden.

KT put the car rental unit up for sale last June, amid aggressive restructuring efforts to come out of the red.

KT, privatized in 1995, has been struggling with sluggish performance in recent quarters largely due to the protracted slowdown in its fixed-line business. It posted a net loss of 966 billion won for 2014. (Yonhap)