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MBK no longer in running for Korea’s Hi-Mart

  • Susannah Birkwood
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MBK Partners is no longer the preferred bidder for South Korean electronics retailer Hi-Mart, having walked away from the auction after due diligence uncovered a worse than expected decline in the business.

According to sources cited by Reuters, MBK said that it needed more time to buy a 65.3% stake after seeing the company's recent performance data.

Hi-Mart has however rejected the private equity firm's request to extend exclusive talks, instead reopening the possibility of rival bidder Lotte Shopping Co. securing the takeover.

Eugene Corp. is one of three major shareholders that between them own 57.6% of Hi-Mart. Their stake is worth about $700 million, based on the company's most recent share price. Hi-Mart's EBITDA forecast for 2012 is $343 million, according to Thomson Reuters, and working on a typical multiple of 8-9x for retail businesses, the enterprise value would be $3.1 billion.

Eugene and its partners bought Hi-Mart from Affinity Equity Partners and Government of Singapore Investment Corp. (GIC) in 2008 for just over $2 billion. Affinity and GIC originally paid $769 million for an 80% stake three years earlier.

A consortium including H&Q Asia Pacific and IMM Private Equity bought a 35% stake in Hi-Mart for $257 million in 2010. The company went public in June 2011, raising $384 million.

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