MBK’s talks to buy S.Korean education platform falter

MBK Partners’ talks to buy a controlling stake in South Korea’s MegaStudyEdu Co. have collapsed, the company said on Friday, a deal estimated at up to 700 billion won ($510 million).

The North Asia-based private equity firm had entered into exclusive talks to buy about a 35% stake in the country’s top online education platform from its largest shareholders, including founder and Chairman Son Joo-eun.

“Our largest shareholders made a final decision not to sell their shares to MBK Partners,” MegaStudyEdu said in a regulatory filing on Friday. It did not provide further details.

Chairman Son holds a 13.53% stake in the education services provider and his younger brother Son Sung-eun owns shares of the same size. MegaStudy, the investment-focused parent company, owns another 6%.

The announcement reversed its previous statement issued last week that its top shareholders were considering various options to sell shares, including selling to MBK Partners.

Both MBK and MegaStudyEdu were understood to have completed due diligence on the latter at a valuation between 1.8 trillion and 2 trillion won. The estimate includes a 100% management premium over its market cap of around 1 trillion won.

The reasons behind the collapsed deal were not disclosed. But market insiders pointed to legal risk surrounding the online platform, which has been embroiled in a 900-billion-won legal dispute with a smaller rival.

ST&Co. filed a complaint against MegaStudyEdu with the Seoul Central District Court last year. It claimed that MegaStudy poached its two most popular instructors before their contracts expired.

In that regard, the online education platform is seeking 889 billion won in compensation.

Concerns of possible outflows of high-performing teachers following MBK Partner’s purchase were cited as another reason by industry watchers.

In June this year, shares in MegaStudy plunged 7%, after math lecturer Hyun Woo-jin hinted at his retirement.

Hyun is the most popular math instructor among high school students in South Korea and makes the biggest contribution to the company’s earnings.

Separately, MBK recently ended negotiations to buy the country’s No. 1 taxi-hailing platform Kakao Mobility Corp. after the latter’s parent company backed down in the face of pushback from its employees and unionized replacement drivers.

Write to Jun-Ho Cha at chacha@hankyung.com
Yeonhee Kim edited this article