Korea's SBW Group eyes bid for textile giant Lycra

South Korean fashion business operator SBW Group is joining the race to acquire global leading textile firm The Lycra Company, investment banking sources said on Thursday.

But market watchers cast doubt on the acquisition plan as the group has failed in some recent acquisition bid attempts for Korean firms, including Ssangyong Motor Co. and Eastar Jet Co., and also is the object of some criminal investigations. 

The group is planning to secure a huge amount of capital via sales of existing shares and issuing new shares in its Kosdaq-listed electronics parts subsidiary SBW Life Sciences Co., formerly Nanos Co.

SBW group affiliates Kanglim Co., a special-purpose vehicle manufacturer, and underwear maker Ssangbangwool Inc. are respectively the largest and second-largest shareholders of SBW Life Sciences.

If an investor buys the tech company shares, it will be the new largest shareholder with possession of SBW Life Sciences' management rights. Accordingly, Kanglim and Ssangbangwool will respectively become the second- and third-largest shareholders, IB sources said.

 

DOUBTS ON THE ACQUISITION PLAN

Market speculators are questioning whether Ssangbangwool Group will be able to purchase Lycra due to the group’s financial conditions. The group’s cashable assets were less than 100 billion won ($70.7 million) as of end-June.   

Uncertainty surrounding the acquisition plan is also swirling due to the group's failures in some recent bids.

SBW Group led a consortium in May to acquire debt-laden Ssangyong Motor, but it failed to convince the sellers of its fundraising capability and normalization plans for the carmaker. A consortium led by the chemicals-to-steel conglomerate KG Group, known to have offered about 900 billion won, was named the new owner of the carmaker in June.  

SBW Group also led a consortium to buy low-cost carrier Eastar Jet Co. last year, but property developer Sung Jung Co. won the deal for a higher price tag than SBW Group’s 108.7 billion won.

As SBW Group’s stock soared amid the competition for the deals, suspicions grew that the group executives had manipulated the stock price. SBW Group’s former Chairman Kim Sung-tae, known to have fled Korea, was arrested and indicted on charges of stock price manipulation when he took over the group in 2010.

The group is also facing charges of bribery against Lee Hwa-young, the CEO of Korea International Exhibition Center (KINTEX), a convention and exhibition center in Goyang, Gyeonggi Province.  

HYOSUNG TNC, TAEKWANG SAID TO BE POTENTIAL CONTENDERS 

Founded in 1958, the Delaware-headquartered The Lycra Company is known for textile fiber brands such as Coolmax and Thermolite. The company posted $1.2 billion in revenues and $212 million in operating profits last year.

Its former owner DuPont Co. sold the firm to Koch Industries Inc. in 2004. China’s fashion giant Shandong Ruyi Group purchased Lycra for $2.6 billion in 2019, but it had to transfer Lycra’s management rights to a group of private equity firms after falling into default on its loans related to the deal.

The PE firms, Korean investment firms Lindeman Asia Investment Corp. and Lindeman Partners Asset Management Co. and Hong Kong-based China Everbrite Ltd. and Thor Asset Management Ltd. are looking for a new buyer for an exit.

Among potential bidders are Korean textile firms Hyosung TNC Co. and Taekwang Industry Co., as well as some Chinese and Japanese companies, according to IB sources.

Write to Si-Eun Park at seeker@hankyung.com
Jihyun Kim edited this article.