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Fried chicken chain BHC set to acquire Outback Steakhouse Korea

SkyLake, the seller, will pocket over fourfold its investment in Outback in just five years

By Jul 20, 2021 (Gmt+09:00)

Korea's No. 2 fried chicken franchise BHC
Korea's No. 2 fried chicken franchise BHC

South Korea’s second-largest fried chicken brand BHC Group has been named the preferred negotiator to acquire a 100% stake in the Korean operations of Outback Steakhouse, an Australian-themed American dining restaurant chain.

According to investment banking sources on Tuesday, Seoul-based private equity firm SkyLake Equity Partners has notified BHC of its decision to choose the chicken chain operator as the final buyer of the stake.

The price of the deal was unknown but sources said the 100% stake is estimated at the higher end of the 200 billion won ($174 million) range.

Barring the unexpected, both sides will sign a sale and purchase agreement soon after finetuning contract terms, they said. Credit Suisse is managing the stake sale.

Last month, SkyLake said BHC and one other bidder – a consortium of Korea’s Daishin Private Equity and Yuanta Securities Korea Co., a unit of Taiwan’s Yuanta Financial Holdings – submitted binding offers for the stake.

Sources said on Tuesday that BHC had proposed a higher bid than the Daishin-Yuanta consortium for Outback Steakhouse Korea.

BHC is acquiring the steakhouse chain half a year after it received an investment of 300 billion won from the Canadian pension scheme OTPP. In 2019, the chicken franchise was one of the five companies that received a combined $424 million from MBK Partners' inaugural special situations fund.

Outback Steakhouse Korea
Outback Steakhouse Korea

SYNERGY FOR BHC’S OTHER FRANCHISE BUSINESSES

Industry watchers say the acquisition of Outback Steakhouse Korea will provide the much-needed synergy for BHC, which also runs four other Korean food restaurant chains. None of them, however, enjoy as much brand recognition as BHC’s fried chicken franchise.

Outback Steakhouse’s core menu offerings include Tomahawk, T-bone and L-bone cuts. Despite costlier transactions per table, the number of visitors has increased over the past years.

Last year, Outback Steakhouse Korea racked up its largest-ever sales of 298 billion won even in the pandemic situation, up 17% from the previous year. Its 2020 operating profit shot up almost 40% to 23.5 billion won from a year earlier, driven by growing delivery services.

Korea's No. 2 fried chicken franchise BHC
Korea's No. 2 fried chicken franchise BHC

This is the second attempt for SkyLake to sell Outback Steakhouse Korea. Last year, the local private equity firm tried to sell the family restaurant chain but failed to reach a deal with potential buyers over price differences.

Should the sale go through this time, SkyLake is expected to pocket over fourfold its investment of 57 billion won in five years.

SkyLake is headed by Chin Dae-je, a former president of Samsung Electronics Co.'s digital media business and ex-minister of information and communications in South Korea

Write to Chae-yeon Kim at Why29@hankyung.com

In-Soo Nam edited this article.

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