BHC aims to complete acquisition of Outback Steakhouse
Outback Steakhouse corporate logo / Korea time file
By Kim Jae-heun
Local fried chicken restaurant franchise BHC, once a subsidiary of BBQ Genesis, is considering whether to acquire Outback Steakhouse Korea as it seeks to become a leading food firm.
Starting with the acquisition of premium beef restaurant chain Changgo 43 back in 2014, BHC has been expanding its profile by acquiring Keunmom Halmae Sundaeguk and Gram Gram. The fried chicken restaurant chain operator has been expanding the number of franchises for each chain aggressively since then.
According to sources, BHC is set to invest up to 200 billion won to acquire a 100 percent stake in the U.S. casual dining chain operator. BHC is competing with Daishin Private Equity (PE) for the deal.
The deal's lead underwriter Credit Suisse will select a preferred negotiator by the end of this week, according to Outback Steakhouse Korea operator SkyLake Equity Partners.
The specific motives behind Daishin PE's bid are unknown. BHC plans to highlight its track record of managing sizable acquisition deals and experience raising the competitiveness of the acquired entities in terms of market share and profit. BHC won 300 billion won in financial backing from Canada's Ontario Teachers' Pension Plan in 2020. Also, BHC is betting that the end of the COVID-19 pandemic will prompt consumers to return to restaurants.
Outback Steakhouse's sales and profits have been declining since SkyLake's 2016 acquisition. The PEF closed down branches that failed to report profits and instead opened stores in newly developed regions. Outback Steakhouse reported 254 billion won in sales in 2019, while its operating profit during the same year came in at 16.7 billion won. During the ongoing pandemic, the American casual dining chain operator saw sales rise to 297.9 billion won and achieved a 23.5 billion won profit last year mostly due to cost-cutting efforts.
If BHC successfully acquires Outback Steakhouse, the two dining chain operators are expected to create synergy, according to a BHC official. “We are looking to become a general food company ultimately. If the price matches our target, we will move forward by closing various acquisition deals,” a BHC official said.