Blackstone signs over $1 bn deal with MBK for 1st exit in Korea

Private equity giant Blackstone Inc. is set to mark its first exit from South Korea by selling a 71.25% stake in the holding firm of Geo-Young Corp., the country's largest medicine wholesaler, for more than $1 billion to Asian buyout firm MBK Partners, sources familiar with the matter said on Monday.

MBK recently signed a stock purchase agreement to buy the controlling stake in the holding firm Cho Sunhae GY Holdings Co., according to sources. The company, valued at around 2 trillion won ($1.4 billion), owns 100% of Geo-Young.

Geo-Young co-founder and Chairwoman Cho Sun-hae, who owns a 21.99% stake in the holding firm, will maintain her ownership and seek co-management of the company with MBK, sources added.

The sale is expected to bring nearly a 100% return to Blackstone as the holding company’s value has almost doubled since the New York-based private equity firm’s acquisition in 2019.

Market watchers expect the deal to mark this year’s first transaction exceeding 1 trillion won in Korea’s merger and acquisition market and accelerate large M&As in the second quarter.

GROWTH THROUGH M&As

Geo-Young was founded in 2002 by Cho, a former pharmacist, and Daewoong Pharmaceutical Co.’s ex-sales manager Lee Hee-koo.

In 2009, Goldman Sachs invested 40 billion won in the drug wholesaler. Geo-Young used the proceeds to acquire smaller domestic peers, build nationwide sales and distribution networks, and become Korea's first medicine wholesaler to establish a regional logistics center.  

Seoul-based Anchor Equity Partners, led by former Goldman Sachs Partner Ahn Sang-gyun, bought a 46% stake in Geo-Young’s holding firm in 2013.

In 2019, Blackstone acquired the stake from Anchor, based on the value of Geo-Young’s holding firm as 1.1 trillion won. The US private equity firm jointly managed Geo-Young with Cho, bulking up the wholesale distributor through acquisitions of industry rivals, including purchasing a 25% stake in Baek Je Pharmaceutical Co. in February 2023. 

The Korean drug distributor has further ramped up its earnings through third-party and fourth-party logistics businesses supplying high-value medical products.

Geo-Young posted 67.2 billion won in operating profit and 3.06 trillion won in revenue last year, becoming the first Korean pharmaceutical company to log more than 3 trillion won in annual revenue.

On a consolidated basis, the wholesaler and its affiliates posted a combined 86.9 billion won in operating profit and 4.44 trillion won in revenue last year, up 14% and 4.9% on-year, respectively.

Write to Jong-Kwan Park at pjk@hankyung.com

Jihyun Kim edited this article.