Will bidders pay right price for Woongjin Coway?

Woongjin Coway has been attracting keen attention from investors and analysts over who will take over Korea’s largest household appliance rental company.

With the bid scheduled to close Thursday, Woongjin Group, which is desperate to secure fresh funds to resolve its worsening liquidity problems, is reportedly asking for 1.9 trillion won for its 25.08 percent stake in Coway, according to analysts.

However, potential buyers are in no big rush as they expect Woongjin to lower the price as time drags on. In fact, the bid has been delayed two times due to requests by bidders for more time to conduct preliminary due diligence.

In June, Coway’s major shareholder Woongjin Group expressed its intention to resell its stake to reduce leverage, just three months after the 1.9 trillion won acquisition by a consortium led by its education unit Woongjin Thinkbig.

After the group had sold off Coway to a private equity firm MBK Partners in 2013 due to a financial crisis, the company bought the water purifier rental firm back in March.

In August, the deal’s lead manager Korea Investment &Securities selected four companies and funds as shortlisted buyers — Seoulbased trading firm SK Networks, a consortium led by China-based Haier and U.S. private equity firms Carlyle Group and Bain Capital.

Korea Investment & Securities is confident about the resell, citing that bidders are showing high interest.

“The shortlisted buyers have been showing strong interest,” the company official said.

Among the shortlisted buyers, SK Networks is the most anticipated bidder. The company has the potential to become the leader in the rental market if it acquires Woongjin Coway, which has a 40 percent market share here.

Woongjin Coway had 7.38 million rental accounts as of the second quarter of this year, including 6.09 million in Korea and 1.29 million in overseas markets. On the other hand, SK Networks had 1.6 million rental accounts in the same period.

Among foreign companies, Haier is most likely to outrival the others. It attempted to acquire Coway, but withdrew from its bidding in 2015 when private equity firm MBK Partners first tried to sell Woongjin Coway.

Carlyle Group reportedly values Woongjin Coway’s leading market position.

“Given previous records of SK Networks and Haier not finishing their race for the Coway acquisition, it is hard to tell whether the two companies seriously want the rental firm,” an industry official said on condition of anonymity.

“Since Woongjin Group acquired Coway for 1.9 trillion won in March, it would be willing to get back what it paid for Coway through the deal.”