Five vying to take over Woongjin Coway
By Lee Hyo-sik
Lotte Group, GS Retail, MBK Partners, SK Networks and Chinese home appliance maker Midea have been selected as the preliminary bidders for Woongin Coway, the country’s largest water purifier and bidet producer, according to investment banking (IB) sources, Tuesday.
More than 20 Korean and non-Korean firms submitted letters of intent on May 9, seeking to take over a 30.9 percent stake in the flagship unit of Woonjin Group.
But besides the five, the rest have failed to be included in a shortlist as the amount they are willing to pay for a stake fell short of expectations of Woongjin Holdings, the parent firm of Woongjin Coway, and sales manager Goldman Sachs. Woongjin said it could add one or two more companies to the shortlist.
The U.S. investment firm plans to allow the five preliminary bidders to conduct due diligence by the end of May. Woongjin and Goldman Sachs will then select a preferred bidder by mid-June and look to seal the deal by the end of next month.
Among the possible contenders, Lotte Group, a retail and hotel-based conglomerate, is reportedly most interested as it seeks to secure Coway’s broad customer base to create synergy with other units involved in business-to-consumer sectors.
GS Retail, a unit of GS group, is currently desperate to find a new growth engine after disposing of its department stores and discount chains.
MBK Partners, Korea’s largest private equity firm which has taken over a number of financial and media firms, is looking to establish a presence in the home appliance industry.
SK Networks, a trading arm of SK Group, wants to acquire Coway to generate synergy effects with its fashion and auto sales units. Midea, a maker of air conditioners and other household electronics goods based in Guangdong Province, is reportedly interested in Coway’s water purifier technology.
Woongjin Group has decided to dispose of its flagship unit to raise funds to improve its balance sheet, as well as boost its solar power business and nurture other future growth engines.
An IB industry official deeply involved in the deal said the sale of the 30.9 percent-stake, or 23.83 million shares, will likely raise between 1.3 trillion ($1.15 billion) and 1.5 trillion won.
The official said circumstances surrounding the sale are extremely volatile, adding it is too early to say exactly how many preliminary bidders will be selected and allowed to conduct due diligence. But he said the unchanging truth is that the one willing to pay the highest price will be able to acquire Coway.
Public relations departments at both Woongjin Holdings and Woongjin Coway said they are not in a position to comment on the issue, saying they do not know much about the sales process.