E-Land sells Modern House to MBK for W700b

E-Land Group closed a deal with MBK Partners to sell its home and living business for 700 billion won ($626 million), according to the company Sunday.

The company will sell 100 percent of its shares in Modern House, a home and living brand that offers lifestyle products. The brand‘s operations will be officially handed over this month through a final contract. The brand, established in 1996, currently brings in sales of about 300 billion won each year.

MBK Partners will continue to operate Modern House outlets in E-Land Retail’s properties for the next ten years.

When the funds for the deal are transferred to E-Land Group in July, E-Land‘s debt ratio is expected to fall to approximately 200 percent, the company said.

Although MBK Partners has also been in talks with E-Land to buy its restaurant chains run by subsidiary company E-Land Park, the deal announced Sunday includes only Modern House.

“Multiple potential buyers are showing interest in E-Land’s restaurants, but E-Land has decided to change course and continue grow the value of its restaurants,” the company said through a statement.

As retail outlets in Korea increasingly shift towards shopping malls that combine food and beverage and entertainment offerings with shopping, E-Land is hoping that maintaining its restaurants will create a synergy with its existing fashion and retail businesses.

Industry analysts say that MBK Partners is targeting E-Land‘s retail assets to strengthen the competitiveness of Homeplus, a hypermarket chain that was acquired by the private equity firm from Tesco in 2015.

Meanwhile, E-Land is using deals such as those with MBK Partners to streamline its structure ahead of the public offering of E-Land Retail.

“We are strongly pursuing structural changes as well, including listing E-Land Retail and completing our transition into a holding company structure,” said an official with E-Land Group. 

By Won Ho-jung (hjwon@heraldcorp.com)