Korea's MegaStudy pulls plug on 35% stake sale to MBK

The company said in July that its largest shareholder, Joo-eun Son, who also serves as chairman, had been reviewing the possibility of a sale to MBK. Local media reported that the private equity firm was looking to buy 35% of MegaStudy Education by taking out positions held by several shareholders, including Son (13.5%) and parent company MegaStudy Group (6%).

Rumours of potential transaction triggered a surge in MegaStudy Education’s share price, which rose from KRW 75,900 in mid-July to KRW 94,200 in early August. The fall over the next few weeks was equally precipitous, with MegaStudy Education closing at KRW 75,600 on September 2, when the decision not to sell was confirmed.

MegaStudy Group was formed in 2000 as an online tuition platform and subsequently diversified into areas such as educational publishing, catering, and technology investment. MegaStudy Education emerged through a spinout of the primary, secondary, higher and adult tuition operations in 2015.

In the primary and secondary segments, the company offers tuition services over periods of 12, 18, and 24 months, comprising online lessons, independent study materials, and one-to-one sessions with teachers. Services are also available offline through a network of 500 education centres.

Higher education operations involve online and self-study courses, exam preparation, and direct management of 13 offline academies. Separate divisions cover university transfers – whereby students can advance to full-length courses after completing initiation programmes – and entrance exam preparation as well as preparation for adults sitting the civil service entrance test.

Higher education was the biggest revenue contributor in 2021 with KRW 430.5bn, followed by primary and secondary education on KRW 165.5bn and the university segment on KRW 55.8bn. Overall revenue reached KRW 703.9bn, up from KRW 474.7bn a year earlier, while net income rose from KRW 20.9bn to KRW 81.5bn.

MBK is currently deploying its fifth Asian fund, which closed on USD 6.5bn in 2020. This is the second time in a matter of weeks that a proposed transaction has fallen over after the seller backed out. The firm was reportedly poised to acquire a KRW 8.5bn position in Kakao’s mobility division until the parent company, which was planning to offload a 10% interest, had a change of heart.

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