Lotte, E-mart, CJ ENM vie to acquire W Concept

W Concept Korea's corporate image / Courtesy of W Concept Korea

By Kim Jae-heun

EBay Korea is not the only target of acquisition by Lotte Shopping and E-mart. The two retail giants, along with CJ ENM, have made it on the shortlist to acquire W Concept Korea, the country's leading women's fashion shopping mall. Its operator, IMM PE, is discussing the final price with the candidates.

IMM PE has whittled down the finalists for the main bidding, and the private equity fund (PEF) is expected to decide the winner within this month.

Lotte Shopping, E-mart, 11STREET and CJ ENM were included in a shortlist revealed last December. However, 11STREET has dropped out before the main bidding.

The remaining three contenders are very interested in buying the shopping platform, which ranks No.1 in the women's online fashion market. W Concept Korea currently holds a 30 percent share of the women's online fashion market and ranks at No. 2 in the overall online fashion mall industry after Musinsa. Musinsa's main customers are men and it once also considered acquiring W Concept to beef up its women's fashion business.

W Concept Korea targets female customers in their 20s and 30s and mostly sells popular fashion brands. Recently, W Concept Korea launched in-house brands such as Hersteller and FRONTROW, seeking to diversify its business portfolio.

However, W Concept Korea's weakness is its focus on women's wear. As a result, the fashion shopping mall has been trying to expand its target customers to middle-aged women and young men, who have become key demographic groups in the fashion industry.

W Concept Korea added cosmetics and lifestyle products to its lineup of items for sale. However, they only account for less than 10 percent of overall gross merchandise value (GMV) of the company at present.

A platform operator's enterprise value is estimated based on annual GMV and not EV-to-EBITDA multiple. When IMM PE took over W Concept in 2019, the fashion shopping mall's annual GMV stood at nearly 200 billion won. Last year, GMV increased more than 30 percent to 300 billion won.

Prior to the bidding, the PEF set 400 billion won as a reasonable selling price. However, buyers felt the price tag was too high.