Qoo10 to buy another Korean rival for unit’s Nasdaq listing

Southeast Asia-based e-commerce platform Qoo10 Pte. Ltd. is poised to take over a smaller South Korean rival through a stock swap deal, in a bid to expand its business through acquisitions of the country’s troubled online malls for a Nasdaq listing of its subsidiary.

Qoo10’s top management has been in talks with teams led by WeMakePrice CFO Chang Seok-hoon for the value and conditions of the sale, aiming to sign a deal later this month without an advisor, according to financial investment industry sources in Seoul on Tuesday.

Singapore’s top e-commerce company directly approached the Korean firm for the takeover in January, the sources added.

The attempt came as Qoo10’s pan-Asia cross-border logistics unit Qxpress Pte. sought an initial public offering on the tech-heavy Nasdaq. Qxpress has been under review by the US Securities and Exchange Commission.

Last year, Qoo10 bought a controlling stake in Korean e-commerce player TMON Inc. from private equity giants Kohlberg Kravis Roberts & Co. and Anchor Equity Partners.

STOCK SWAP DEAL

Qoo10 is considering a stock swap deal that utilizes Qxpress’ shares of WeMakePrice to minimize cash spending, through a deal in which WeMakePrice shareholders sell their stakes to receive new stocks issued by Qxpress, sources in Seoul said. WeMakePrice would become a subsidiary of Qxpress once the deal is concluded.

Such a stock swap deal will provide WeMakePrice’s shareholders with the opportunity to seek better exit strategies amid the sustained losses of the e-commerce player. WeMakePrice's turnaround and growth could also boost Qxpress’ corporate value.

WeMakePrice is drawing consensus from shareholders on how to swap stocks. Its top stockholder is Wonder Holdings, with an 86.2% stake, established by the company’s founder Hur Min; NXC Corp., the holding company to gaming giant Nexon Co., holds 9% while the local PE firm IMM Investment Co. has 4.8%.

NXC and IMM Investment are unlikely to oppose a stock deal as they're trying to exit with profits from the loss-generating Korean e-commerce platform, analysts said. WeMakePrice reported an operating loss of 33.8 billion won ($25.8 million) based on sales of 244.8 billion won in 2021, after logging 54.2 billion won in losses and 385.3 billion won in revenue in 2020.

It is also hard to find new investors that estimate WeMakePrice’s valuation higher than the existing shareholders. NXC and IMM Investment valued the company at 1 trillion won in 2015 when they bought its stakes. The PE firm raised the enterprise value to 2.8 trillion won in 2019 when it increased its stake.

Qoo10 took over TMON through a similar stock deal whose size was not disclosed. The Singapore-based company was reported to have offered such a trade to acquire the commerce business of Korea’s first-generation online retail platform Interpark Corp. Its top shareholder, Lee Ki-hyung, decided to sell a 28.41% stake in the e-commerce player held by himself and related parties in 2021.

Qoo10 CEO Ku Young Bae had proposed a stock swap deal to acquire eBay Korea Inc. in 2021 but talks for the deal floundered as eBay Inc. wanted a cash deal.

Write to Ji-Eun Ha at hazzys@hankyung.com
 
Jongwoo Cheon edited this article.