PAG inks $127 mn deal to sell Tobots-maker Young Toys to MiraeN, 2 local PEFs

Hong Kong-based investment firm PAG has agreed to sell South Korean toymaker Young Toys Inc. to a consortium led by local education service provider MiraeN Co. for about 150 billion won ($127 million).

According to investment banking industry sources, PAG signed a sales and purchase agreement (SPA) to sell 100% of Young Toys to MiraeN and two Korean private equity funds -- Nvestor Co. and Corstone Asia -- on August 27.

The value of the transforming robot toy maker is known to be some 150 billion won, about 50 billion won less than the original estimate, reflecting the company’s worsened earnings in the wake of the COVID-19 pandemic. New York-based BDA Partners was the lead manager of the sale.

 

The sale of Young Toys, Korea’s leading toymaker, was on hold after the strongest candidate MiraeN sat on its decision in March amid growing economic uncertainty surrounding the coronavirus virus outbreaks. But negotiations resumed as Young Toys saw an unexpected rise in sales amid protracted suspension of preschools and kindergartens. Young Toys’ 2020 EBITDA is estimated at around 20 billion won, similar to last year’s.

PAG bought Young Toys back in 2015 from another Hong Kong-based private equity firm Headland Capital Partners Ltd. in a bid to leverage the Korean toymaker to reach Chinese consumers.

Formerly known as Pacific Alliance Group, PAG manages US$40 billion in capital across strategies including private equity, real estate and absolute returns. The firm has struck a number of high-profile deals in the past few years, including its funding in Key Safety Systems’ $1.6 billion purchase of troubled Japanese airbag maker Takata Corp.

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Spun off from local publisher Kyemongsa Co., Young Toys emerged as Korea’s major toymaker with the 1999 launch of Kongsuni, a 5-year-old female doll that was an instant hit among Korean boys and girls.

It became Korea’s No. 1 toymaker, overtaking perennial leader Lego, in 2013 after the global success of Tobot, a car that transforms into a humanoid. Other representative products of the company include Bey Blade Bust and Secret Jouju.

MiraeN, the buyer, specializes in education services, including the production of school textbooks and reference books. MiraeN’s other business areas include printing and investments in the energy and leisure sectors. Through the purchase of Young Toys, MiraeN wants to transform into an educational entertainment company by taking advantage of the toymaker’s toy and animation content.

Nvestor Co., a financial company established in 2015, is wholly owned by MiraeN, while Corstone Asia is a local private equity firm dedicated to investments in middle-market buy-out, mezzanine and middle-market growth equity.

Write to Chae-Yeon Kim at why29@hankyung.com