Hyundai gives up on Winia Mando

Staff examines the production line for Winia Mando’s kimchi refrigerator, at its Asan plant, South Chungcheong Province. / Korea Times

By Park Jin-hai

Hyundai Group has give up its plan to acquire Winia Mando, a refrigerator and air conditioner maker, which the conglomerate sold 15 years ago.

Hyundai Green Food, a subsidiary of leading domestic retailer Hyundai Department Store, announced on Friday that it cancelled a 150 billion won deal with global private equity firm CVC Capital Partners to purchase the firm.

Winia Mando is renowned for its “Dimchae” refrigerator for storing kimchi.

Hyundai signed a memorandum of understanding with the equity firm on Aug. 7 for the purchase of Winia Mando. It was sold to CVC Capital Partners in 1999.

Following due diligence, the two parties should have signed a share purchase deal by Sept. 4. By failing to do so, the deal was declared null and void.

The failure leaves the appliance manufacturer on the market again.

The defaulted deal will ensure that Hyundai Department Store suffers a setback in its bid to expand its business as well.

The store was especially in need of finding a new growth engine because its retail business has faced hurdles amid a government push to revive mom-and-pop stores and traditional markets.

The premium retailer posted 172 billion won in operating profit and 157.9 billion won in net profit in the first half of this year, down 11.5 percent and 10 percent, respectively, from a year before.

Due to the sluggish local consumption and shrinking margins, it has been unable to open a new store since August 2012, when its last store was opened in Cheongju, North Chungcheong Province.

Unlike its retail rivals, such as Lotte and Shinsegae, Hyundai has not moved into the large discount store business.

The retailer had shown high expectations about the acquisition of Winia Mando. It once said, “It seeks to create a synergy by combining production and sales, as it has home shopping arm Hyundai Home Shopping Network and food retail arm Hyundai Green Food.”

Winia Mando has a more than 30 percent share in the kimchi refrigerators market. Its sales of the refrigerators account for more than 80 percent of its total revenue. It also produces air washers, water purifiers and air conditioners.

As part of its efforts to diversify its business, Hyundai Department Store acquired fashion firm Handsome in 2012 and furniture manufacture Livart last year. Recently, it made an aborted bid to buy home and kitchen appliance manufacturer Tongyang Magic.

As for the reason for its pullout, the firm stated that in the review process, it found the synergy effects from the acquisition would not be as big as expected, citing the saturated market and fierce competition in the related industry.

Foreign investors have continued to reduce their stakes in Hyundai Department Store since 2012 due to rising doubt over the retailer’s growth potential.

According to financial data from local stock brokerage firms, foreign shareholdings in the store, which peaked at 46.1 percent in 2011, slid to 43.5 percent in 2012 and 41.6 percent in 2013.