GS fills Shinsegae's place in M&A market

GS Group headquarters in Seoul / Korea Times photo by Shim Hyun-chul

By Park Jae-hyuk

GS Group is drawing attention in the domestic M&A market, because the conglomerate has been mentioned as the potential buyer of Hugel and Yogiyo, while Shinsegae Group decided to step away from these huge acquisition deals in an apparent attempt to avoid financial difficulties, following its takeover of eBay Korea in June.

On Friday, GS Retail confirmed that it is considering joining a consortium to acquire Yogiyo from Delivery Hero.

The announcement was made in response to multiple news reports that the conglomerate's retail unit had joined hands with two private equity firms based abroad ― Affinity Equity Partners and Permira ― and has been in exclusive negotiations to take over the food delivery platform from the German company for 1 trillion won ($875 million).

The announcement came as a surprise to many market insiders, because MBK Partners had been regarded as the strongest candidate to acquire Yogiyo, after Shinsegae's e-commerce arm, SSG.com, officially dropped out of the final bid in June.

On the same day, Shinsegae Inc. and Hugel announced that the former and the latter's largest shareholder, Bain Capital, have quit talks, because the Korean retailer eventually decided not to acquire a controlling 44-percent stake in the botulinum toxin maker, which is estimated at $2 billion.

As a result, GS Holdings has emerged as the potential winner of the global competition to acquire Hugel.

The conglomerate said on June 29 that it was considering acquiring a minority stake in Hugel by forming a consortium. This potential move has been interpreted as part of its efforts to reinforce its biopharmaceutical business.

At this moment, it is still unclear whether or not GS Group will continue to pursue the acquisition of Yogiyo and Hugel. Until 2019, the group's previous attempts to take over Daewoo Shipbuilding & Marine Engineering, Korea Express, Coway, KT Rental, Doosan Infracore and Asiana Airlines ended in failure.

However, GS Group Chairman Huh Tae-soo, who took office in late 2019, is considered to be different, due to his expertise in M&A deals, thanks to his career, built at Continental Bank, Irving Bank and LG Investment & Securities.