Will Lo­gen suc­ceed in find­ing a new owner?

The Korea Times - - FINANCE - By Anna J. Park an­na­j­park@ko­re­atimes.co.kr

The M&A deal to sell Lo­gen Lo­gis­tics may take more time than pre­vi­ously thought, as the Korean par­cel de­liv­ery firm’s stake­holder Bar­ing Pri­vate Eq­uity Asia (BPEA) cur­rently un­der­goes Lo­gen’s re­cap­i­tal­iza­tion — the process of re­struc­tur­ing a com­pany’s eq­uity and debt ra­tios to make its cap­i­tal struc­ture more sta­ble — of 190 bil­lion won ($159 mil­lion).

Ac­cord­ing to in­vest­ment bank­ing (IB) in­sid­ers, once the re­cap­i­tal­iza­tion process is com­pleted, by next month at the ear­li­est, ne­go­ti­a­tions with mul­ti­ple bid­ders will be re­sumed to find the par­cel de­liv­ery firm’s new owner.

“Lo­gen is un­der­go­ing a re­cap­i­tal­iza­tion process that will be com­pleted by Au­gust. Once the re­cap­i­tal­iza­tion is done, M&A deal ne­go­ti­a­tions will fol­low,” one source told The Korea Times.

The IB in­sider also dis­missed re­ports over BPEA’s agree­ment with Well to Sea In­vest­ment for a stock pur­chase agree­ment (SPA) by the end of July, adding that there ex­ist other bid­ders be­sides Well to Sea In­vest­ment are con­sid­er­ing an M&A deal with BPEA.

Hong Kong-based BPEA pur­chased the na­tion’s fourth-largest par­cel de­liv­ery firm back in 2013 for about 160 bil­lion won from

Mi­rae As­set’s ven­ture cap­i­tal arm.

In 2016, BPEA came close to selling the firm to CVC Cap­i­tal Part­ners yet the deal didn’t ac­tu­ally hap­pen, even af­ter an SPA was signed by the two par­ties. Since then, the Hong Kong-based pri­vate eq­uity firm has had dif­fi­culty in un­load­ing its hold­ings in Lo­gen at its de­sired price.

Ear­lier this year, var­i­ous con­glom­er­ates and eq­uity firms, in­clud­ing Lotte Group, Shin­segae Group’s on­line shop­ping mall SSG. com, and JC Part­ners, showed an in­ter­est in the pur­chase deal ei­ther as strate­gic in­vestors or fi­nan­cial in­vestors.

How­ever, no tan­gi­ble progress has yet been made. Well to Sea In­vest­ment was also pur­su­ing the deal, worth about 350 bil­lion won. An of­fi­cial from Well to Sea In­vest­ment said ne­go­ti­a­tions be­tween the two sides are on­go­ing.

Mar­ket watch­ers say one of the rea­sons for the dif­fi­culty in find­ing an M&A deal is Lo­gen’s unique struc­ture as its busi­ness is heav­ily de­pen­dent upon the volatile con­sumer-to-con­sumer (C2C) mar­ket. Al­though the firm is ranked as the coun­try’s fourth-largest par­cel de­liv­ery ser­vice, Lo­gen’s mar­ket share was be­tween 7 per­cent and 8 per­cent, and lags be­hind CJ Lo­gis­tics, Han­jin Ex­press and Lotte Global Lo­gis­tics, which have solid strengths in the busi­ness-to-busi­ness (B2B) area.

“Due to the spe­cial struc­ture of the par­cel de­liv­ery in­dus­try, it’s not easy to make a sig­nif­i­cant value-up with the sole power of a fi­nan­cial in­vestor. That’s why par­tic­i­pa­tion by in­flu­en­tial strate­gic in­vestors, who al­ready have a sta­ble busi­ness on their own, could boost the par­cel de­liv­ery firm’s fun­da­men­tal value,” an un­named mar­ket watcher said.

Newspapers in English

Newspapers from Korea, Republic

© PressReader. All rights reserved.