[M&As Weekly] Infection slowdown pushes deal closures, new bids

The mergers and acquisitions scene in South Korea remains relatively vigorous, as small and medium-sized enterprises are looking for more chances to cash out assets amid the continued COVID-19 threat to markets and industries. With a slowing number of confirmed cases, deals that have been postponed for weeks due to the virus are back on the table.

Below is a roundup of major M&A deals here and their progress in the previous week.

Centroid to take over Woongjin book unit

Woongjin unveiled on Thursday a plan to sell a majority stake in its book distributor arm Woongjin Booxen for 49.3 billion won ($40.4 million).

The proposed buyer, Seoul-based private equity firm Centroid Investment Partners, will take over 71.9 percent of common shares and preferred shares combined. According to the terms, Woongjin has the rights to repurchase the stake from Centroid within three years by exercising a call option.

Woongjin said the sell-off is aimed at “improving its balance sheet” of the group in a regulatory filing.

Woongjin Group, a local leader in education, information technology services and theme park operations, has been looking to normalize its debt risks following its troubled acquisition of water purifier rental service firm Coway in 2019. The deal forced Woongjin to resell Coway promptly and offload shares in other subsidiaries to secure cash. Woongjin Booxen has a 65 percent domestic book distribution market share.

Green Cross completes UBCare deal

A consortium led by GC Health Care managed to close the acquisition of UBCare, Korea‘s largest electronic medical records system vendor.

On Thursday, GC Health Care, a subsidiary of Green Cross Holdings, paid 208.9 billion won to buy the 52.7 percent of shares from venture capital houses STIC Investment and Kakao Investment. The payment is over 60 percent leveraged, by Green Cross Holdings and the Korea Development Bank, according to the filings.

The deal was to close in late April when they signed an agreement in February this year. But the fallout from the coronavirus has caused a delay in garnering a nod by the Fair Trade Commission.

The closing of the deal will allow GC Health Care to “create a synergy” with its existing business and expand a business related to the “fourth industrial revolution,” as said in an earlier disclosure.

Eximbank to open bidding for shipbuilder

State-run lender Export-Import Bank of Korea will be opening a bid to sell off its stake in Dae Sun Shipbuilding & Engineering, as its debt restructuring efforts appear to have been paying off.

Eximbank Korea on Wednesday announced a plan to put the midsized shipbuilder up for sale, six years acquiring a majority stake.

Dae Sun turned around in 2018, posting a 4.1 billion-won operating profit. In 2019, its operating profit came to 1.1 billion won.

In an anticipated shipbuilding industry revamp, another policy lender KDB is also moving to sell Hanjin Heavy Industries & Construction, another Korean shipbuilder.

The deal, however, brings attention to the declining shipbuilding orders due to the fallout of the novel coronavirus.

The global shipbuilding orders came to 2.33 million compensated gross tons in the January-March period this year, falling some 70 percent on-year, according to data from Clarkson Research Services.

By Son Ji-hyoung (consnow@heraldcorp.com)