이 기사는 2020년 02월 28일 08:00 thebell 에 표출된 기사입니다.

South Korea’s D’Live, the third largest cable TV service provider, is seeking to sell its stakes in entertainment unit Cube Entertainment, a move that could expedite its own sale process. The sell-side, creditors of D’Live, is likely to focus more on the speed of the deal rather than the price.

Cube Entertainment said in a regulatory filing on February 21 that the company will sell a 30.61 percent stake that iHQ owns to Kosdaq-listed cosmetics and media commerce company VT GMP.

Several potential buyers including VT GMP have reportedly participated in the deal while VT GMP has shown the strongest will to acquire the company.

VT GMP will take over the entertainment company for 29.1 billion won, lower than the sell-side’s desired price of more than 30 billion won. It is said that all potential buyers of the company, including VT GMP, submitted acquisition price exceeding 30 billion won on their letter of intent (LOI). The price has been lowered during the negotiation process.

Market watchers say the acquisition price has decreased due to its stock price fluctuation. Creditors of D’Live initially planned to calculate the valuation of Kosdaq-listed Cube Entertainment using the company’s stock price and peer group’s price to earnings (P/E) multiple. The entertainment company included SM, YG Entertainment and JYP Entertainment in its peer group when merged with Woori Special Purpose Acquisition 2 (Woori SPAC II) in 2015.

However, as shares of Cube Entertainment have fluctuated a lot over the past few months, its efficiency to calculate the valuation has weakened. The company’s shares, which were once 1500 won to 2000 won, rocketed to almost 7000 won in February 2019. After that, the stock price dropped to 2000 won level and rebounded to 5000 won level thanks to renewed hopes for the sale.

“Market watchers once estimated the fair valuation of Cube Entertainment at around 23 billion won. With the shares trending up recently, expectations of D’Live creditors seem to have heightened as well,” said an M&A industry insider. “As the M&A issue has pushed up the company’s stock price lately, the stock price couldn’t be able to reflect the fair enterprise value. The sell-side and buy-side both have agreed on the situation and adjusted the transaction price,” he added.

Creditors of D’Live and the new owner could reach an agreement in such a short amount of time as the creditors have decided to sell the company separately. Creditors initially planned to sell D’Live, its entertainment units iHQ and Cube Entertainment as a whole. Later they have changed the plan and put Cube Entertainment up for sale first.

“D’Live creditors have decided to sell Cube Entertainment first as the deal price is not that big. They focused more on speed rather than price. Creditors seem to be satisfied with the overall result of the deal,” said an IB industry source.

Now the market has shifted its attention to the sale of D’Live. Considering its transaction price and some other issues, market watchers seem pessimistic on the D’Live sale. Another IB industry source said that the market reaction to iHQ is subdued while D’Live is still facing regulatory uncertainties.

D’Live creditors are expected to discuss an option for replacing a lead manager for the sale of D’Live. A foreign investment bank is highly likely to replace current lead manager Samil PricewaterhouseCoopers (PwC).

(By reporter Kim Byung-yoon)