이 기사는 2021년 06월 01일 08시32분 thebell에 표출된 기사입니다

Market insiders are paying attention to the price tag of South Korea’s dairy product maker Namyang Dairy Products, which is set to be acquired by private equity firm Hahn & Co.

Hahn & Co will acquire a controlling 53% stake in the scandal-ridden Namyang Dairy Products for 310 billion won ($278 million), which is nearly two times the company’s market capitalization of about 300 billion won based on the closing price on Thursday.

Buyout deals normally carry a 30% premium, which is much lower than a 100% premium for the latest Namyang deal.

Namyang can’t be valued based on an enterprise value/earnings before interests, taxes, depreciation and amortization (EV/EBITDA) multiple as the company recorded loss last year.

The dairy product maker posted an operating loss of 77.1 billion won in 2020, with an EBITDA of negative 18.6 billion won. The company held cash and cash equivalents of around 140 billion won as of the first quarter.

However, Namyang’s long-time rival Maeil Dairies can be used as a reference. Maeil Dairies currently has market capitalization of around 630 billion won and had net cash of 6.6 billion won as of the end of 2020.

Maeil Dairies’ multiple is about 5.25 times when its market capitalization is divided by the consolidated EBITDA of 120 billion as of the end of 2020.

When Maeil Dairies’ multiple of 5.25 times is applied to Namyang’s EBITDA of 53 billion won in 2019 on a consolidated basis, Namyang’s enterprise value comes to around 280 billion won.

The company’s equity value is estimated at 450 billion won after reflecting its net cash of 170 billion won. Even if a higher multiple is applied, the value of 100% of Namyang’s stake doesn’t seem to be able to exceed 500 billion won. Its current value is likely to be even lower than the figure because it is based on the company’s financial results in 2019, which was better than its performance in 2020.

Some market insiders noted that a 100% premium is somewhat too excessive considering that financial investors like Hahn & Co need to sell assets to return capital to investors.

It is believed that Hahn & Co has made the acquisition as it thinks it could normalize Namyang’s operation in a short period of time if the PE firm can adopt an intensive strategy to enhance management efficiency, which will lead to better financial results and a rise in the stock price.

Some said Hahn & Co has acquired the company at a low price given Namyang’s long history and product competitiveness. (Reporting by Si-eun Park)