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Mubadala joins GS-led group to buy Korean botox maker

The $1.7 bn deal to give GS future growth engine with Hugel’s strong international presence

By Aug 11, 2021 (Gmt+09:00)

3 Min read

Hugel's botulinum toxin.
Hugel's botulinum toxin.

Abu Dhabi’s sovereign investor Mubadala Investment Co. joined a consortium led by South Korean GS Group to acquire the country’s top botox maker Hugel Inc. from a US private equity firm Bain Capital for about 2 trillion won ($1.7 billion).


The consortium is in the final stages of talks to acquire a 42.9% stake in Hugel, including management rights, according to investment banking (IB) industry sources on Aug. 11. The consortium consists of GS Holdings, the group’s holding company, Mubadala, private equity firms CBC Group (formerly C-Bridge Capital) and IMM Investment Corp.

GS Holdings provided 10-20% of the fund, while those financial investors were responsible for the rest. The consortium and Bain were scheduled to sign a share purchase agreement (SPA) next week. Bank of America Merrill Lynch is handling the deal.

Mubadala manages a diverse portfolio of assets and investments in the United Arab Emirates and abroad, to generate sustainable financial returns for its shareholder, the Government of Abu Dhabi.

The sovereign investors in 2019 formed a partnership with Samsung Bioepis Co. on a sales license for a biosimilar product.

FUTURE BREAD AND BUTTER

GS Group aims to make inroads into the bio industry for a future growth engine through the takeover.

“GS Group has been agonizing over its future business for a long time,” said an IB industry source. “Through the acquisition of Hugel, it is expected to make a foray into a new sector and expand the business size.”

Hugel, founded in 2001, is South Korea’s leading maker of botulinum toxin, more commonly known as botox, dominating about half of the local market. It exports the product to 27 countries including China, Japan and Vietnam.

Hugel has rapidly grown since it became the world’s sixth maker that developed botulinum toxin in 2010. It took the lead in the domestic botox market, while Medytox Inc., the No. 1 maker until 2015, and Daewoong Pharmaceutical Co. have engaged in a legal battle over the source of botox strain used by Daewoong since 2016. Last year, Hugel reported record earnings with 78 billion won in operating profit and 211 billion won in revenue on consolidated basis.

GS Group is set to obtain a next growth engine with Hugel. The group has been seeking bread and butter for the future amid weakening growth potential in its core refining business.
GS Group headquarters in Seoul.
GS Group headquarters in Seoul.

CHINA, NORTH AMERICA

It has chosen Hugel, given the company’s potential in overseas markets, according to the industry sources. Hugel is the only South Korean botox maker that has a sales license in China. It has been selling Letybo since it received approval from in October last year.

The Chinese botox market is rapidly growing with a forecast to nearly triple to 18 billion yuan ($2.8 billion) in 2025 from the current 6.5 billion yuan. Hugel’s revenue and operating profit in the second quarter rose 33.7% and 59.1% on-year to 64.5 billion won and 26.5 billion won, respectively, thanks to strong overseas sales of botulinum toxin and hyaluronic acid (HA) fillers.

GS Group may seek cooperation with CBC Group on its business in China. CBC Group is a healthcare-dedicated investment firm focused on middle and late-stage growth and buyout investment opportunities in China including the pharmaceutical, biotech, medical technology and healthcare services sub-sectors.

The North America is another promising market. Hugel is expected to sell its products in the United States and Canada from 2022 since it submitted applications for product approval to authorities in the countries in March and June, respectively.

Write to Chae-Yeon Kim at why29@hankyung.com
Jongwoo Cheon edited this article.
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