Can Morgan Stanley handle both Yogiyo, eBay deals?
A man enters a Morgan Stanley building in New York in this 2007 file photo. AP-Yonhap
US investment bank faces concerns over conflict of interest
By Park Jae-hyuk
Morgan Stanley has come under scrutiny recently among local observers of the domestic M&A market, since it was reportedly selected as the underwriter for the sales of both Yogiyo and eBay Korea.
Some insiders here have raised concerns over a possible conflict of interest, given the two companies share a pool of potential buyers. Those mentioned as such are foreign and domestic private equity firms (PEFs), conventional retailers and IT firms here.
Attention is therefore focusing on whether the U.S. investment bank will handle both buyout deals successfully or whether it will focus on only one of them.
Scooters for delivering orders placed on Yogiyo are parked in front of its office in Seoul last June. Yonhap
At this moment, the sale of Yogiyo seems to be a more urgent matter because the Fair Trade Commission ordered the Germany-based Delivery Hero ― its de facto owner ― to sell its entire stake in the food delivery service provider by August, if it wanted to continue a bid to take over Korea's delivery service market leader Baedal Minjok from Woowa Brothers.
The sale can be delayed for six more months, if circumstances beyond Delivery Hero's control occur.
According to industry sources, Delivery Hero hired Morgan Stanley as the underwriter for the sale and selected Bae, Kim & Lee as the legal adviser. Sources said the investment bank will send out bid solicitations to potential buyers this month.
Some analysts mentioned local tech companies as the strongest candidates for a takeover.
“This is too good opportunity to miss for Naver, Kakao and Coupang to upgrade the status of their platforms,” Hyundai Motor Securities analyst Kim Hyun-yong said.
A local news outlet, however, reported Delivery Hero has contacted a PEF in Hong Kong with the intention to sell Yogiyo to financial investors, instead of strategic investors, such as conventional retailers or IT firms.
eBay headquarters in San Jose, California. EPA-Yonhap
The intention of Delivery Hero will likely lead the local office of Morgan Stanley to face a potential dilemma because PEFs are also the top candidates for the takeover of eBay Korea.
MBK Partners and KKR have been mentioned as potential buyers of the e-commerce firm due to their experience in managing retail businesses. The former owns the Homeplus discount chain, and the latter is the largest shareholder of local e-commerce firm, TMON.
Morgan Stanley is handling the sale of eBay Korea with Goldman Sachs, according to sources. The two investment banks have reportedly sent bid solicitations to potential buyers here and overseas.
However, the sales of Yogiyo and eBay Korea are still facing skeptical views.
“The U.S. headquarters of eBay will not be able to sell its Korean subsidiary for 5 trillion won because Korean market supremacy has already gone to Naver and Coupang,” Hanwha Investment & Securities analyst Nam Sung-hyun said. “The company missed the opportune moment to make additional investments.”
Regarding the sale of Yogiyo, industry officials point out that potential buyers may hesitate to acquire it because fierce competition between the buyer and seller on the domestic market will be unavoidable.
Despite such difficulties, the sellers of Yogiyo and eBay Korea appear to be betting on Morgan Stanley's track record, which include the recent sale of Hyperconnect, the unlisted Korean startup that operates the Azar video chat app, to the Nasdaq-listed Match Group, which is well known for its dating-app Tinder.