E-Mart to join buyout of Korean meat importer

E-Mart Inc., South Korea’s retail giant Shinsegae Inc.’s supermarket chain, is slated to participate in IGIS Investment Partner’s management buyout of meat seller OK Meat Inc., according to banking industry sources. 

IGIS Investment Partners, a venture capital subsidiary of Korea’s largest real estate asset manager IGIS Asset Management Co., is in the final stage of negotiations with OK Meat. The VC firm will acquire a 90.3% stake in the meat seller from OK Meat Chief Executive Hong Seung-soo and obtain new shares worth 20 billion won ($16.2 million). The deal for a combined 92.5% stake will reach 150 billion won ($121.7 million).

As a strategic investor in the acquisition, E-Mart is planning to purchase a 20% stake in the special purpose company (SPC), which IGIS founded for the deal, at 25 billion won. The Shinsegae subsidiary has also secured an option for preemptive rights to be able to acquire the remaining shares in the future.

Founded in 2000, OK Meat imports refrigerated and frozen meat products from Australia and the US and sells them to Korean wholesale and retail firms. The meal seller also owns Chef Partner, one of the largest processors of imported meat in Korea, and distributes products to conglomerate retailers such as E-Mart, Lotte Shopping Co. and GS Retail Co.

In 2021, OK Meat’s sales, operating profit and earnings before interest, taxes, depreciation and amortization (EBITDA) reached 482.7 billion won, 16 billion won and 16.3 billion won, respectively. The company ranks between third and fourth in the Korean meat import market.

E-Mart is betting on the growth potential of Korea’s imported meat market. In Korea's beef market, imported products make up 60% and have shown more than a 10% annual growth rate over the past three years. E-Mart is planning to speed up the sales of OK Meat via itself, e-commerce giant SSG.COM and other Shinsegae retail subsidiaries.

The supermarket chain has bulked up its food and beverage business through mergers and acquisitions in recent years. Since it established Los Angeles-based affiliate PK Retail Holdings Inc. in 2018, it has acquired Good Food Holdings, a holding company for US food retailers, for 307.5 billion won and US grocery store firm New Seasons Market for 323.6 billion won.

In February, its parent group Shinsegae acquired Napa Valley-based US winery Shafer Vineyards for $250 million to expand E-Mart’s wine business, which posts over 100 billion won in annual wine sales.    

Also, E-Mart entered into exclusive M&A talks with a US F&B franchise operator last December and opened its new F&B chain Bristol Farms Newfound Market in Irvine, California in March, which covers premium food stores, wine stores and restaurants.

Write to Chae-Yeon Kim at why29@hankyung.com
Jihyun Kim edited this article.