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Behind the scenes of GS-led group's $1.5 bn Hugel purchase

Since Chairman Huh Tae-soo took office in late 2019, GS Group has begun hunt for M&A targets

By Aug 31, 2021 (Gmt+09:00)

Behind the scenes of GS-led group's />.5 bn Hugel purchase 

South Korea's energy-to-construction conglomerate GS Group was not considered a serious bidder when it entered the race for a 46.9% stake in the country's top botox maker Hugel Inc. in a consortium.

Since separated from the LG Group in 2004, the parent group of GS Caltex Corp., GS Engineering & Construction Co. and GS Retail Co. had focused on stable, organic growth with a focus on oil refining, apartment building and retail businesses.

When the world's No. 2 shipbuilder Daewoo Shipbuilding & Marine Engineering Co., electronics retailer Hi-Mart and construction equipment maker Doosan Infracore Co. came on the market several years ago, the country's eighth-largest business group appeared to weigh its possible bids, but pulled out at the early stage.

Since Huh Tae-soo, 63, took the reins of the conglomerate in late 2019, the group has begun to look outside of its industries. Most of its hunt for acquisition targets, however, had ended up with minority stakes in domestic startups until it sealed the 1.7 trillion won ($1.5 billion) purchase of control of Hugel, together with financial investors from three countries.

"We felt like there was a substantial change in GS Group's culture. It was the most aggressive bidder from the early stage," said an investment banking source with knowledge of the matter.

"We can say the winner of the race was already determined from the start."

In preparation to buy a 46.9% stake in Hugel up for sale by Bain Capital, the GS-led consortium was far ahead of its rival bidders. 

When other Korean business groups including Samsung and Shinsegae weighed the pros and cons of the possible acquisition, GS had already embarked on the fundraising process for the group's largest-ever acquisition, according to investment banking sources.

It brought in Abu Dhabi’s sovereign investor Mubadala Investment Co., Singapore-based private equity firm CBC Group and Seoul-based IMM Investment Corp. as financial backers of the transaction.

Chairman Huh, who had led GS Home Shopping, now combined into GS Retail, between 2007 and 2019, picked Hugel as the conglomerate's next growth pillar to advance into biopharmaceutical business and green biotechnology that uses eco-friendly solutions.

In particular, the group with a market capitalization of 15 trillion won bet on the overseas growth potential of Hugel, the only South Korean botox maker with a sales license in China. It exports botox and dermal filler products to 27 countries, including Japan, Taiwan and Vietnam.

Hugel's botox brand Botulax
Hugel's botox brand Botulax


When the GS-led consortium was in the final stage of exclusive talks with Bain Capital in July, Hugel's Chinese sales partner Sihuan Pharmaceutical had jumped into the race with a higher bid price.

Beijing-based Sihuan teamed up with unidentified financial investors. It was keen to take over Hugel because its market capitalization has nearly quadrupled to 4 trillion won since it secured the Chinese distribution license of Hugel's botox products in China.

But Bain Capital preferred a domestic strategic buyer for a quick deal closing and in consideration of Hugel's domestic business growth, according to the sources.

Established in 2001, Hugel developed the botulinum toxin, known as botox, as the sixth company in the world in 2010. It became the first South Korean company to enter the Chinese market in October 2020.

Commanding about half of the domestic market, the company enjoyed its best-ever operating profit of 78 billion won last year on sales of 211 billion won. Its second-quarter operating profit spiked 59.1% to 26.5 billion won from a year earlier, with sales up 33.7% during the same period.

GS Group's Investments in Korean Companies:

Company Name Deal Size GS Group's Investment Amount Investment Partner/Details When
STX Energy (currently, GS Global) 630.6 billion won (71.89%) 564.9 billion won (64.39%) LG Corp. Dec. 2013
Mesh Korea N/A (19.53%) Bought the stake from Humax Co. Apr. 2021
Kakao Mobility   30 billion won (0.73%) July 2021
Petfriends  95% 32.5 billion won (30%) IMM PE July 2021
Danggeun Market 178.9 billion won  20 billion won Aug. 2021
Yogiyo* 1 trillion won (100%) 300 billion won (30%) Affinity Equity Partners, Permira Aug. 2021
* The deal size includes an additional investment of 200 billion to buy new shares.


GS Group is understood to secure just a 10% stake in Hugel of the 46.9% stake its consortium acquired. No further details of its new ownership were disclosed.  

GS has also won rights to buy additional Hugel shares owned by Singapore's CBC ahead of other bidders. But questions remain about whether GS is able to exercise management rights over the company with just a 10% stake. 

Another challenge facing the GS-led group would be a possible legal battle with Hugel's domestic rival Medytox Inc. Kosdaq-listed Medytox is preparing legal action against Hugel over the source of botox strain used by Hugel and Daewoong Pharmaceutical Co., once its five-yaer legal disputes with Daewoong over the issue is wrapped up.

Write to Chae-yeon Kim and Jung-min Nam at

Yeonhee Kim edited this article.

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