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Gong cha put up on M&A market again

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By Anna J. Park
  • Published KST
  • Updated KST

A Gong cha store in Daegu / Courtesy of Gong cha Korea

Global milk tea brand's valuation expected to exceed $443 mil.

Gong cha, globally famous for its milk tea beverages, has returned to the merger and acquisition (M&A) market after four years.

According to the investment banking industry, TA Associates, a leading U.S. private equity firm that currently owns the brand, recently selected a global investment bank as its M&A adviser and began the sales process.

TA Associates acquired Gong cha in 2019 from UCK Partners, a Korea-headquartered private equity firm, for about 350 billion won ($258 million). Given that the milk tea business's earnings before interest, taxes, depreciation and amortization (EBITDA) is estimated to be over 60 billion won, the corporate valuation of the firm is expected to surpass 600 billion won.

Gong cha is a milk tea brand initially launched in Taiwan in 2006. Kim Yeo-jin brought the brand into the Korean market in 2012 amid a bubble tea fad.

Gong cha's various tea beverages contain milk, ice and chewy tapioca pearls.

UCK Partners acquired a 65 percent stake in Gong cha Korea from Kim in 2014, becoming the largest shareholder. The private equity firm secured the right to the Japanese market and purchased a 70 percent stake of the Taiwanese headquarters in 2017, which made Gong cha Korea the de facto headquarters of the milk tea brand's global business.

Gong cha logo

Under the ownership of UCK Partners, the number of Gong cha stores increased nearly tenfold from 126 in 2013, just before the acquisition, to 1,201 in 2019. Sales also jumped from 26.9 billion won to 208.2 billion won during the same period. Afterwards, UCK Partners sold Gong cha to TA Associates for 350 billion won, making a more-than-fivefold profit.

Gong cha went on to grow its global presence further by increasing its number of branches to about 2,000. Currently, it operates stores in some 20 countries, including the U.S., China, Taiwan, Japan, Mexico, the Philippines, Indonesia and Australia.

Last year, the company's consolidated sales stood at 180.9 billion won with an operating profit of 16.8 billion won.