Coway to be put up for auction

Korean private-equity firm MBK Partners plans to sell off its controlling stake in Korean water and air-purifier-maker Coway, which is valued at around 3 trillion won ($2.5 billion), industry sources said Sunday.

MBK Partners, the biggest shareholder of Coway with a 30.9 percent stake, hired U.S. investment bank Goldman Sachs to broker the sale.

“MBK is considering the sale process and other measures as many potential buyers lined up for the acquisition and it’s been nearly three years since the firm bought Coway,” a source said.

MBK has not officially announced the deal, but an official said, “We are mulling strategic options.” 

Local retail giants Lotte, Hyundai Department Store and Hankook Tire as well as some Chinese firms and strategic investors are eyeing the buyout, according to the sources.

Given typical takeover premiums of 30 percent, the price tag for Coway, which had a market value of over 8 trillion won as of Friday’s close, could exceed 3.2 trillion won.

At that size, the deal would be one of the country’s biggest takeovers in the second half of this year, along with Tesco’s Korean unit Homeplus, which has been valued at $6 billion.

The potential sale of the water purifier-maker’s shares came days after Coway reported its best-ever performance in the second quarter this year with 527 billion won in sales and 111 billion in operating profit, up 0.8 percent and 14.4 percent, respectively, from a year earlier.

Shares of Coway also have doubled to 104,500 won over the past three years since the Seoul-based private-equity firm bought the controlling stake in the firm for 1.19 trillion won from Woongjin Group in January 2013.

“MBK seems to be thinking it’s the right time to sell Coway as its market value has increased enough and the country’s M&A deal market is showing brisk activity,” the source said.

According to Coway, the firm’s branches in the United States and Malaysia contributed to the firm’s strong performance in the second quarter. Sales of home appliances such as bidets and water purifiers also improved with 6.2 percent on-year growth.

“Coway’s performance will improve in the second half of 2015. We plan to launch new Internet of Things-applied products and are poised to diversify our business portfolio,” said Lee Jae-ho, the company’s chief financial officer.

By Park Han-na (hnpark@heraldcorp.com)