Uncertainty deepens as Homeplus fails to attract bidders in main sale

Rep. Yoo Dong-soo, center, who leads the ruling Democratic Party of Korea’s task force to resolve the Homeplus crisis, and other officials hold a press conference at the National Assembly in Seoul, Wednesday, following the failed final Homeplus bid, urging government intervention. Yonhap

Homeplus' corporate rehabilitation process has entered a state of uncertainty after the main acquisition bid, which closed Wednesday, received no participants. Industry officials said Thursday that, in the worst-case scenario, liquidation may be considered.

The supermarket chain, controlled by private equity firm MBK Partners, filed for corporate rehabilitation with the Seoul Bankruptcy Court on March 4, following a credit rating downgrade.

According to the court, no bids were submitted by the deadline for Homeplus’ main public sale.

“We will review and decide on the next steps for the rehabilitation process, including whether to prepare an independent recovery plan or initiate a second round of bidding,” the court said.

Harex Infotech, a fintech company, and SNomad, a real estate leasing and development company, which both took part in preliminary bidding, ultimately did not participate in the main sale.

Factors that have deterred potential buyers from pursuing Homeplus include weak prospects for the retail sector despite its high valuation. Homeplus, the country’s second-largest discount supermarket chain, is valued at about 7 trillion won ($4.8 billion).

The company’s substantial debt, combined with declining financial performance, adds to the concern. As online retailers increasingly dominate the market, sales at large supermarkets are falling.

A report by Samil PwC, the country’s largest accounting firm and the court-appointed investigation committee, indicates that Homeplus’ liquidation value stands at about 3.68 trillion won, surpassing its going-concern value of about 2.5 trillion won.

Potential acquirers also face significant employment obligations. According to the Homeplus union, the company directly employs 20,000 people, with another 80,000 to 90,000 in indirect positions.

Amid growing concerns, the union has appealed for government intervention. On Nov. 17, union members staged a rally in front of the presidential office in Seoul, stating, “The government can no longer overlook a matter that impacts local businesses and the livelihoods of more than 100,000 people.”

Lawmakers are urging the National Agricultural Cooperative Federation (NACF) to take over Homeplus from a “public interest standpoint.”

During a parliamentary audit last month, Rep. Eoh kiy-ku of the ruling Democratic Party of Korea urged NACF Chairman Kang Ho-dong, who appeared before the audit, to consider the acquisition.

Kang, however, rejected the idea, citing the NACF’s own financial losses.

Critics also warn that a NACF takeover could create further complications. Unlike major supermarkets, NACF and its stores procure agricultural products to support farmers and stabilize prices, meaning their supply chains operate very differently from those of typical large retailers.

Regarding the issue, a Homeplus official said, “Should an appropriate buyer come forward before the rehabilitation plan submission deadline on Dec. 29, the company could extend the sale process and postpone the submission of the plan. We will continue to accept bid proposals until that time.”