Glenwood PE to acquire minority stake in Korea's largest beauty chain

CJ Group has selected Glenwood Private Equity as the buyer of a minority stake in South Korea’s No. 1 health and beauty store CJ Olive Young, which aims to make its trading debut in 2022, according to industry sources on Dec. 23. 

Glenwood PE ultimately won the deal after competing against major PE firms, including Goldman Sachs Principal Investment Area (PIA), IMM Private Equity, STIC Investments, and domestic retail giant Hyundai Department Store. 

Industry sources say Glenwood PE had the upper hand in terms of the proposed amount and conditions. The share purchase agreement is expected to be signed on Dec. 24.

CJ Olive Young's enterprise value is estimated to be around 2 trillion won ($1.8 billion). 

The company's robust distribution network across the country likely played a key role in attracting Glenwood PE, which has displayed a great deal of interest in the retail sector. It competed against Lotte Group to acquire the convenience store chain Ministop in 2018, although the PE firm was not selected.

Glenwood PE will be acquiring a non-management stake from the group's family shareholders who are putting up part of their shares in the beauty chain, including CJ Group Chairman Lee Jay-hyun’s son and heir apparent Lee Sun-ho who holds a 7.97% stake, and the chairman's brother Lee Jae-hwan with a 10.03% stake. 

Industry watchers say the group is likely to use the proceeds to fortify the owner family's governance. Heir apparent Lee, who currently holds a 2.75% in the group, may acquire an additional stake in CJ Corp. to increase his shareholdings in the group or use it for inheritance tax. 
The group plans to reshuffle its operations and concentrate on food, retail and media as key business areas through M&As. Currently, the group's subsidiary CJ Foodville Corp. is carving out its bakery chain Tous Les Jours and the CJ Logistics Corp. is seeking to sell its Chinese logistics firm CJ Rokin.

Meanwhile, market chatter over the possible sales of CJ Foodville, movie chain CJ CGV Co. and home shopping operator CJ O Shopping has yet to cease.

CJ Olive Young is the No. 1 domestic health and beauty player, holding 50.09% share of the market as of the first half of this year. It operated around 1,250 stores nationwide as of the end of 2019. 

Last year, the company posted 365.9 billion won ($330.5 million) in revenue with operating profit of 16.6 billion won.

Glenwood PE has a solid reputation for specializing in carve-out deals, as noted by its previous ventures, including the acquisition of Halla Cement, formerly known as Lafarge Halla Cement, and home appliance maker Tongyang Magic. The firm set up an 800 billion won fund this year.


Write to Chae-yeon Kim at why29@hankyung.com
Danbee Lee edited this article.