The Nature Holdings acquires swimwear brand Barrel Acquisition cost represents a 47.8% control premium to market price

Translated by Ryu Ho-joung 공개 2022-05-24 08:05:10

이 기사는 2022년 05월 24일 08:02 더벨 유료페이지에 표출된 기사입니다.

South Korean apparel company The Nature Holdings is set to acquire a controlling stake in swimwear brand Barrel as it looks to diversify its business into athleisure.

The Nature Holdings agreed to buy a 47.73% stake in Barrel for about 64 billion won ($50.4 million), the company said in a filing on May 16.

“The Nature Holdings had continued to explore potential targets for acquisition since its attempt to buy golf brand TaylorMade ended in failure last year and it recently decided to acquire Barrel,” said an industry insider.

“The Nature Holdings was the only potential buyer that expressed interest in Barrel, obviously because of the low attractiveness of the brand given its heavy exposure to water sports.”

Barrel’s main products include swimwear and rash guards, with 86.4% of its total revenue coming from the water sports space. This made the company particularly vulnerable to the effect of the Covid-19 pandemic.

Kosdaq-listed Barrel reported 7.7 billion won in operating loss on revenue of 21.5 billion won in 2021, down 19.4% year-on-year. This compares to revenue of 59.9 billion won and an operating profit of 8.5 billion won in 2019, which was before the pandemic.

Some are bearish about the company’s earnings prospects even after social-distancing measures are eased, reducing its attractiveness to potential buyers. This made The Nature Holdings the sole potential buyer for Barrel.

The two sides reached an agreement on a price of 17,000 won per share, which represents a 47.8% control premium to a market price of 11,504 won. This compares to a 40% average control premium for typical acquisitions in the South Korean M&A market.

Some industry experts think the acquisition price was expensive, saying that The Nature Holdings seemed to be in a hurry to acquire Barrel in order to make up for the missed opportunity to buy TaylorMade.

But The Nature Holdings says its acquisition of Barrel is part of its plan to enter the booming athleisure market and will also create synergies with its apparel business.

“It took longer than expected to reach an agreement on the price,” said an official at The Nature Holdings. “We plan to use the acquisition as a stepping stone to enter the athleisure market abroad, which will help improve our financial performance.” (Reporting by Hyo-beom Lee)
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