Unitas exits Buy The Way – to Lotte

This sale to a strategic takes the nine other potential buyers rumored to be bidding for the asset, reportedly including the Carlyle Group and rival Korean retail chain Ministop, out of the picture.

Unitas originally bought Buy The Way 100% in July 2006, at an enterprise value of around KRW190 billion ($164 million), which also comprised significant acquisition debt. Subsequent paydown of this debt under Unitas’s stewardship means that the final return on equity is substantially above 2x, according to AVCJ sources.

Lotte won out in the competitive sale process, sources confirmed, because of its experience in M&A transactions, which gave added comfort and certainty to the sellers. Just as important, though, was the Korean conglomerate’s readiness to guarantee not to sack any of Buy The Way’s employees or reduce their salaries as a result of the acquisition.

Lotte already operates the Korean 7:11 franchise, under license from Seven & I Holdings, and acquired Buy The Way through its Korea Seven unit. The acquisition will allow it to build this business, already the number three convenience store player in the Korean market, as a contender for the number two position against market leaders FamilyMart and GS25.

Buy The Way is currently around the fourth largest Korean convenience store operator by number of outlets, with 1400 stores, up from 980 outlets when Unitas originally bought it some three and a half years ago. AVCJ sources indicated that Unitas had overhauled Buy The Way, an under-managed orphan business within its original parent conglomerate, Orion Corp., soon after purchase, with a detailed business plan already in place, driven by in-house professionals experienced in the consumer and retail sectors and supported by new management appointed by Unitas.

Lotte’s decision to develop its convenience store business indicates the strength of the Korean consumer sector, which is likely to deliver further deal opportunities in future, sources said.

Deutsche Bank advised Unitas on the Buy The Way sale. The transaction is not fully finalized, but is expected to conclude by end March. Unitas declined to comment formally to AVCJ.

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• Topics
• North Asia
• Consumer
• Exits
• The Carlyle Group
• Unitas Capital