MBK, Kakao eyeing eBay Korea
Private equity fund (PEF) MBK Partners and local internet firm Kakao Corp. are tapped as two of the most viable candidates to possibly acquire eBay Korea, the country’s No.2 e-commerce company that went up for sale last month.
According to a source from the investment banking industry, eBay Korea’s financial advisers — Morgan Stanley and Goldman Sachs — have been distributing teaser letters to potential buyers.
Soon, they will meet with shortlisted candidates to sign non-disclosure agreements and share details about the company.
It has not been revealed how much eBay Korea’s corporate value stands at currently, but it is estimated at around 5 trillion won ($4.5 billion).
Kakao could have its e-commerce subsidiary Kakao Commerce acquire a controlling stake in eBay Korea. Kakao Commerce’s main business is e-coupons used through the instant message application Kakao Talk. Last year, Kakao Commerce’s gross merchandise value (GMV) stood at 3 trillion won and annual sales reached 300 billion won.
The items traded on the Kakao Talk platform are e-coupons, not real products. Recently, Kakao Commerce started selling luxury goods online in an effort to expand its product line.
If it takes over eBay, Kakao Commerce will not only increase the number of items on its platform, but also rise instantly to become the No.2 player in the local e-commerce market.
MBK Partners wants to acquire eBay Korea and create synergy with its discount store retail chain Homeplus, another source said on condition
of anonymity.
Many local discount stores are showing a decrease in sales as customers flock to online merchants to buy products. MBK Partners wants to take this as chance to enter the online business. Also, it could make up for its weakness in the fresh food sector by allocating eBay Korea items through Homeplus. MBK Partners took over Homeplus in 2017 by spending 5.6 trillion won to acquire a 100-percent stake in the discount store chain.
Another e-commerce firm Qoo10 has a high chance of purchasing eBay Korea. Qoo10 founder Ku Youngbae
also established Gmarket, one of the leading e-commerce platforms owned by eBay Korea along with Auction. In 2009, Ku sold Gmarket to eBay Korea for $1.2 billion when its annual GMV marked 5 trillion won.
Now, Ku wants to bring back its old platform and merge with Qoo10, an online marketplace based in Singapore where people can easily find Korean products and purchase them from overseas. Qoo10 operates in China, Singapore, Indonesia and Hong Kong and is currently the No.1 player in Singapore in terms of GMV.
However, Qoo10 is said to own too little liquidity to acquire eBay Korea. Ku will have to raise funds by attracting financial investors to secure enough money. He can also approach PEFs to seek investments.
Meanwhile, eBay Korea’s sales account for 11 percent of eBay’s overall revenue. The Korean branch’s business performance has shown steady growth since 2017. Its sales stood at 951.8 billion won four years ago, but reached a historic high of 1.61 trillion won in 2019. eBay Korea’s operating profit, however, has stagnated in the 60 billion won range in the same period.