Private equity firms line up for Tongyang Magic

[THE INVESTOR] The sale of local home appliance vendor Tongyang Magic, a deal estimated at some 500 billion won (US$448 million), has drawn offers from as many as 10 preliminary bidders, with private equity firms showing particular interest.

Those who submitted letters of intent by the Aug. 11 deadline included local private equity firms IMM PE and Stic Investment along with global PEFs Carlyle Group, TPG Capital, Bain Capital and CVC Capital. 

Local food conglomerate CJ Group, SK Networks, Unid, Hyundai Department Store Group, SJ Networks and Chinese home appliance maker Midea were also among the preliminary bidders.

The intensified competition could raise the price of Tongyang Magic to over 600 billion won.

A consortium of Glenwood Private Equity and NH PE bought a 100 percent stake in Tongyang Magic at 280 billion won in 2014.

NH Investment & Securities, the main manager of the takeover deal, will announce shortlisted bidders on Aug. 16.

The final round of bidding is expected to be held in the middle of September after five weeks of due diligence.

Tongyang Magic reported 38 billion won in operating profit and 393 billion won in revenue last year, a sharp improvement from 322 billion won in sales and 23 billion won in operating income in 2013.

Tongyang Magic supplies a range of household appliances, including gas ovens, washing machines and vacuum cleaners.

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