Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

In a very unusual move, the Woongjin Group Chairman Yoon announced that the Woongjin Group plans to resell <a href="https://www.smartkarma.com/entities/coway-co-ltd" target="_blank" data-smartkarma-citation="entities:3022:1" rel="noopener">Coway Co Ltd (021240 KS)</a>.  This announcement comes after Woongjin Group reacquired Coway only three months ago from MBK Partners (which originally acquired Coway from Woongjin Group more than six years ago). Currently <a href="https://www.smartkarma.com/entities/woongjin-thinkbig-co-ltd" target="_blank" data-smartkarma-citation="entities:8994:1" rel="noopener">Woongjin Thinkbig (095720 KS)</a> has a 25.08% stake in <a href="https://www.smartkarma.com/entities/coway-co-ltd" target="_blank" data-smartkarma-citation="entities:3022:1" rel="noopener">Coway Co Ltd (021240 KS)</a> (this is the stake that is being resold). Woongjin Group has spent about 2 trillion won in buying back Coway, of which debt financing accounted for about 1.6 trillion won.We believe that the Woongjin Group's decision to re-sell <a href="https://www.smartkarma.com/entities/coway-co-ltd" target="_blank" data-smartkarma-citation="entities:3022:1" rel="noopener">Coway Co Ltd (021240 KS)</a> will have a negative impact on this stock. However, it should have a positive impact on <a href="https://www.smartkarma.com/entities/woongjin-thinkbig-co-ltd" target="_blank" data-smartkarma-citation="entities:8994:1" rel="noopener">Woongjin Thinkbig (095720 KS)</a> as the sale of Coway stake will certainly reduce the probability of Woongjin Thinkbig of entering any type of bankruptcy.Therefore, going long Woongjin Thinkbig and going short Coway may provide an attractive risk/reward trade.

In a very unusual move, the Woongjin Group Chairman Yoon announced that the Woongjin Group plans to resell Coway Co Ltd (021240 KS).  This announcement comes after Woongjin Group reacquired Coway only three months ago from MBK Partners (which originally acquired Coway from Woongjin Group more than six years ago). Currently Woongjin Thinkbig (095720 KS) has a 25.08% stake in Coway Co Ltd (021240 KS) (this is the stake that is being resold). Woongjin Group has spent about 2 trillion won in buying back Coway, of which debt financing accounted for about 1.6 trillion won.We believe that the Woongjin Group's decision to re-sell Coway Co Ltd (021240 KS) will have a negative impact on this stock. However, it should have a positive impact on Woongjin Thinkbig (095720 KS) as the sale of Coway stake will certainly reduce the probability of Woongjin Thinkbig of entering any type of bankruptcy.Therefore, going long Woongjin Thinkbig and going short Coway may provide an attractive risk/reward trade. 

Korea M&A Spotlight: Woongjin Group Plans to Re-Sell Coway

Thematic (Sector/Industry)

We highlight 20 Korean companies that are seeking to find new owners through M&amp;As in 2019. Key sectors of M&amp;A in Korea in 2019 include consumer, financial, and industrial. Our analysis is based on the publicly available information. Among the major Korean chaebols, the Lotte Group is poised to make significant sales of its various finance related companies in 2019 including Lotte Insurance,Lotte Card, and Lotte Capital. <a href="https://www.smartkarma.com/entities/16050" target="_blank" data-smartkarma-citation="entities:16050:1">Lotte Holdings (004990 KS)</a> would be a key beneficiary of the continued strategic restructuring of various Lotte related companies. Active M&amp;As in the Korean E-Commerce sector - In 2018, some of the major completed M&amp;A deals (inbound) include Softbank's $2 billion investment in Coupang, Affinity Equity Partners and BRV's 1 trillion won investment in Shinsegae Group's SSG.com e-commerce business, L'Oréal's acquisition of Stylenanda, Woongjin Group &amp; STIC Investment's acquisition of <a href="https://www.smartkarma.com/entities/3022" target="_blank" data-smartkarma-citation="entities:3022:1">Coway Co Ltd (021240 KS)</a>, Shinhan Financial Group's acquisition of ING Life Insurance Korea, and Korea Kolmar's acquisition of CJ Healthcare. Some of the major completed M&amp;A deals (outbound) include the KCC Consortium's acquisition of Momentive (US), LG Electronics' acquisition of ZKW (Austria), and CJ Cheiljedang's purchase of Schwan's Inc. (US). <div class="content-highlight">Among the various M&amp;A sectors in Korea in 2019, we find financials and industrial sectors to be quite interesting.</div>

We highlight 20 Korean companies that are seeking to find new owners through M&amp;As in 2019. Key sectors of M&amp;A in Korea in 2019 include consumer, financial, and industrial. Our analysis is based on the publicly available information. Among the major Korean chaebols, the Lotte Group is poised to make significant sales of its various finance related companies in 2019 including Lotte Insurance,Lotte Card, and Lotte Capital. Lotte Holdings (004990 KS) would be a key beneficiary of the continued strategic restructuring of various Lotte related companies. Active M&amp;As in the Korean E-Commerce sector - In 2018, some of the major completed M&amp;A deals (inbound) include Softbank's $2 billion investment in Coupang, Affinity Equity Partners and BRV's 1 trillion won investment in Shinsegae Group's SSG.com e-commerce business, L'Oréal's acquisition of Stylenanda, Woongjin Group &amp; STIC Investment's acquisition of Coway Co Ltd (021240 KS), Shinhan Financial Group's acquisition of ING Life Insurance Korea, and Korea Kolmar's acquisition of CJ Healthcare. Some of the major completed M&amp;A deals (outbound) include the KCC Consortium's acquisition of Momentive (US), LG Electronics' acquisition of ZKW (Austria), and CJ Cheiljedang's purchase of Schwan's Inc. (US). Among the various M&amp;A sectors in Korea in 2019, we find financials and industrial sectors to be quite interesting.

2019 Korea M&A Market Outlook - What’s For Sale?

South Korea

Woongjin Energy Co., Ltd. manufactures solar power modules for the use of solar energy for residential and commercial systems.

Woongjin Energy (103130 KS)

Korea M&A Spotlight: Woongjin Group Plans to Re-Sell Coway

In a very unusual move, the Woongjin Group Chairman Yoon announced that the Woongjin Group plans to resell Coway Co Ltd (021240 KS). This...

Douglas Kim

2019 Korea M&A Market Outlook - What’s For Sale?

We highlight 20 Korean companies that are seeking to find new owners through M&As in 2019. Key sectors of M&A in Korea in 2019...

Douglas Kim