GS to compete with Shinsegae to acquire Hugel

GS to seek new growth engine with biopharmaceutical business

By Kim Jae-heun

GS Chairman Huh Tae-soo

GS Group (GS) has joined the bidding process for Hugel, the country's No.1 medical botulinum toxin (botox) maker, as part of efforts to seek new growth engines.

The conglomerate is the latest in a string of business groups that have joined the competition to acquire 44 percent of Hugel. The successful bidder will also be able to claim management rights.

Competitors include retail giant Shinsegae Group.

The American private investment firm, Bain Capital, is the largest shareholder of Hugel, with a 42.9-percent share. It is considering selling the biopharmaceutical firm privately rather than through an open bid.

GS has said that nothing has been confirmed about its acquisition of Hugel, although it has admitted that it is interested in the biopharmaceutical business.

“The biopharmaceutical industry is one of the candidates for future business for GS Group, so we are interested in it,” a GS official said.

GS Group's main business is oil refining, and it has reached its limit for growth. At the same time, the world is moving towards the trend of decarbonization and GS has to start looking for new businesses.

Hugel's botulinum toxin (botox) product for export to China / Courtesy of Hugel

GS Group is paying attention to the growth potential of Hugel, which is aiming to achieve 1 trillion won ($885.3 million) in sales by 2025.

Hugel has been a leader in the local botox market since 2016. It was the first firm to get permission from China's National Medical Products Administration to export its botox product, last year.

Hugel's hyaluronic acid product, an injectable facial filler, has also been a best seller here since 2019. With these two popular items alone, the biopharmaceutical company achieved all-time high sales of 211 billion won and 78 billion won in operating profit in 2020.

The market estimates Hugel's sale price at 2 trillion won. If GS successfully takes over Hugel, it will be the refiner's first acquisition deal in the trillion-won range since separating from LG Group.

However, the outlook for GS's acquisition of Hugel looks uncertain. GS has a tendency to pull itself out of bids at the last moment. It joined an open bid for Daewoo Shipbuilding & Marine Engineering and Hi Mart in the past, but gave up. It also failed to acquire Coway and KT Rental during similar bidding competitions.

Even last year, it reviewed purchasing Asiana Airlines and Doosan Infracore, but decided not to. The only investment it made last year was to purchase a small amount of shares in Mesh Korea, which operates the delivery service, Vroong.

Nevertheless, young chairman Huh Tae-soo took the reins of GS Group starting last year and has promised to actively search for targets of acquisition.

“Chairman Huh built his career at LG Investment & Securities, so he has no resistance to making big deals. He knows that major investments are necessary for GS Group to survive during these 'new normal' times. We will have to see what plan Huh has for Hugel,” an industry source said.