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eBay Korea draws SK Tel, Shinsegae and MBK

Mar 16, 2021 (Gmt+09:00)

eBay Korea draws SK Tel, Shinsegae and MBK 
The sale of eBay Korea Inc., the country's third-largest online shopping platform, has attracted preliminary bids from leading Korean companies including SK Telecom Co. and Shinsegae Inc., as well as private equity firm MBK Partners, in a deal estimated at over 5 trillion won ($4.4 billion).

Around eight companies submitted non-binding bids for the South Korean unit of eBay Inc., including Southeast-based shopping platform Qoo10, according to investment banking sources on Mar. 16.

The planned sale of eBay Korea gathered steam following the sector's second-ranked Coupang Corp.'s successful US listing last week, with around 10 companies receiving information memoranda from its sale managers.

The sell-side is asking over 5 trillion won for a 100% stake in the South Korean unit that runs the country's two popular shopping platforms -- Gmarket and Auction -- as well as a curated shopping platform, G9.

Initially, the asking price was deemed high, but Coupang's US showing changed the mood, with the sale now drawing keen interest not only from retailers but also IT companies and private equity firms.

Coupang plans to utilize its IPO proceeds of $4.6 billion to further challenge retail giants Shinsegae and Lotte, as well as platform behemoths Naver and Kakao.

 South Korean e-commerce market's major players
 Company  Naver  Coupang  eBay Korea  11Street  Lotteon
 Market share 17% 13% 12%  6%  5%

The preliminary bidders will be shortlisted and given two months for due diligence before submitting binding bids around May or June, the sources said.

The bidders also need to decide whether or not to include the 4% stake in unlisted Kakao Bank held by eBay Korea in their bidding price.

 eBay Korea's results
 2020 2019
 Operating profit  Sales Operating profit Sales
83 billion won  1.2 trillion won  61.5 billion won  1 trillion won

SK TELECOM

SK Telecom's Chief Executive Park Jung-ho said on Tuesday that it was natural for the country's top mobile carrier to participate in the bidding for eBay Korea, without elaborating further.

A combination of SK's online shopping mall 11Street, with a transaction value of 10 trillion won, and eBay Korea, with 17 trillion won in annual transactions, would create the country's biggest e-commerce player.

With the energy-to-telecom SK Group scaling back on its refining and petrochemical businesses, the acquisition of eBay Korea would balance the group's telecom-heavy business portfolio.

eBay Korea draws SK Tel, Shinsegae and MBK 

SHINSEGAE

Shinsegae's supermarket chain E-Mart also is keen to buy eBay Korea. The retail group is expected to join forces on the bid with Affinity Equity Partners, the second-largest shareholder of SSG.COM, Shinsegae's e-commerce platform.

"Shinsegae Group is reviewing funding plans with Affinity Equity Partners," an investment banking source told Market Insight, the capital news arm of The Korea Economic Daily. "Vice Chairman Chung Yong-jin is more determined to acquire eBay Korea than the market speculated."

In comparison, Shinsegae's close rival Lotte Group, which runs the online platform Lotteon, is considering participating in the final bidding for eBay Korea, but it is not seen as serious as the other bidders, according to the sources.

Among PEFs, MBK Partners is the most aggressive. eBay Korea could be a good fit for its Korean retailer HomePlus, under growing competition from online rivals, and may aid in its exit from the supermarket chain. The North Asia-focused PEF acquired 100% of HomePlus for 7.2 trillion won in 2015. 

KAKAO PULLS OUT

Kakao Corp., South Korea's dominant mobile platform, was the first company to express interest in eBay Korea late last year. But it was confirmed to have dropped out of a bid for an unknown reason.

eBay Korea's gross merchandise value, a key valuation measure of e-commerce companies, is estimated at 17 trillion won. The company has made profits in the past 17 consecutive years. On the downside, however, its sales remained stagnant last year, in contrast to Coupang Corp. which doubled its revenue thanks to the e-commerce boom amid the stay-at-home trend.

(Correction: Kakao Corp. was confirmed to have dropped out of the race for eBay Korea. The headline and the lead were corrected accordingly.)

Write to Jun-ho Cha at chacha@hankyung.com

Yeonhee Kim edited this article.

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