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[Exclusive] E-commerce

MBK seeks to buy two S.Korean e-commerce platforms

A combination of KoreaCenter and Danawa expected to strengthen online niche marketing strategy

By Nov 09, 2021 (Gmt+09:00)

MBK seeks to buy two S.Korean e-commerce platforms
MBK Partners is in talks to buy management rights of two e-commerce platforms listed on South Korea's Kosdaq market in a package deal, according to investment banking sources on Tuesday.

North Asia-focused MBK is seeking to buy both existing and new shares in KoreaCenter Co., which helps create e-commerce websites for retailers. Then KoreaCenter will use the funds from the new share issues to buy Danawa, which offers price comparison services.

The PE firm is likely to spend about 1 trillion won ($850 million) in the package deal, according to the sources.

In a public tender for Danawa due on Nov. 18, KoreaCenter will participate on behalf of MBK. It is expected to compete with five other candidates, including Seoul-based PE firm VIG, KG Group and financial services firms. 

KoreaCenter has been touted as the most suitable candidate for Danawa in terms of post-merger synergy to be created. Now backed by MBK, it emerged as the strongest buyer.

Founded in 2000, KoreaCenter runs several e-commerce platforms. Among them are the country's No.1 shop for overseas direct purchases; MakeShop, South Korea's No. 2  website builder for small- and medium-sized retailers; and SummercePlatform Inc., a price comparison website.

Back in 2018, KoreaCenter had discussed a merger with Kakao Corp, the country's mobile giant, but their talks collapsed due to price discrepancies.

By comparison, Danawa, among the country's first-generation e-commerce platforms, provides price comparison services for a wide array of products. It also runs a separate shopping channel and an online secondhand marketplace.

A combination of the two online platforms is expected to create synergy for big data-driven e-commerce business, given that Danawa's businesses largely overlap with those of KoreaCenter's SummercePlatform. 

MBK seeks to buy two S.Korean e-commerce platforms
If the deal goes through, MBK is expected to pursue a series of acquisitions of other online platforms through KoreaCenter, dubbed a platform of platforms.

Global sales services account for 60% of KoreaCenter's sales which are divided into domestic, global and big data divisions. For cross-border purchases, it provides domestic shoppers with one-stop solutions from import declaration to customs clearance to delivery.

KoreaCenter runs 10 fulfillment centers in six countries, including the US, China and Germany, in line with a 31.7% rise in overseas direct purchases by South Koreans in the first half of this year from a year earlier.

KoreaCenter acquired eNuri.com, another platform of price comparison services, for 100 billion won in 2018.

"In addition to eNuri.com which provides big data-driven unique services, an acquisition of Danawa specialized in PC shopping will strengthen its niche marketing strategy," said one of the sources.

In an annual newsletter to investors last March, Michael ByungJu Kim, MBK's founder and chairman, said his firm would take into account technology elements such as big data and digitalization, when investing in the consumer sector. He noted that it would "get big online, or go home."

Since its acquisition of Lotte Card in the billion-dollar range in 2019, MBK has kept a low profile in South Korea's red-hot M&A market despite raising $6.5 billion in its fifth buyout fund.

But MBK had seriously considered investing in JobKorea, an online recruitment portal and eBay Korea, making it to their final rounds of bids. But it pulled out of the deals because of high valuations.

Write to Jun-ho Cha and Chae-yeon Kim at chacha@hankyung.com

Yeonhee Kim edited this article.

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