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Outback Steakhouse Korea put up for sale by PEF

Apr 12, 2021 (Gmt+09:00)

Outback Steakhouse's delivery menu
Outback Steakhouse's delivery menu

South Korea-based private equity firm Skylake Equity Partners is seeking to sell a 100% stake in Outback Steakhouse Korea, as the PE firm and sale manager Credit Suisse plan to distribute an information memorandum to interested buyers this week, according to the investment banking industry on Apr. 12.

Potential buyers for Outback Korea are likely to come from a pool of PE firms and strategic investors, including restaurant businesses. The price tag is projected to exceed 200 billion won ($178 million).

This is the second attempt for Skylake to sell Outback Korea. Last year, the PE firm tried to sell the family restaurant chain, attracting PE firms at home and abroad, alongside strategic investors who reviewed the deal. However, it was scrapped for various reasons, including price differences.

In 2016, Skylake invested 57 billion won to acquire a 100% stake in the Australian-themed restaurant chain and made strategic investments to upgrade the menu. For example, the restaurant’s core menu offerings were replaced with more expensive, premium steaks, including Tomahawk, T-bone and L-bone cuts.

This meant costlier transactions per table, but it proved effective as the business saw a rise in customers despite the increased prices. In fact, while the COVID-19 crisis dealt a heavy blow to most offline restaurant chains, Outback Korea remained sound thanks to its flourishing delivery business.

Last year, the company pulled in all-time high earnings with its revenue reaching 297.9 billion won, from 254 billion won in 2019. Over the same period, its operating profit rose to 23.5 billion won from 17 billion won.

Outback Korea is considered a prime example of a domestic PE firm driving up a company's valuation post-acquisition.

“Outback was seen as a family restaurant that had gone out of style. But Skylake’s premium strategy helped increase the restaurant’s brand value,” said an investment banking industry official, adding that new investors are likely to deliberate over additional upside.

Should the sale go through, Skylake will be exiting five years after its initial investment into the restaurant chain, pocketing over fourfold its investment. 

Meanwhile, Skylake set up a 750 billion won blind fund last year and since then has been actively acquiring various businesses, such as copper foil and advanced materials maker Solus Advanced Materials Co., formerly Doosan Solus Co., and road management vehicles and equipment manufacturer, Retech.

Write to Chae-yeon Kim at why29@hankyung.com

Danbee Lee edited this article.

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