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MBK Partners in talks to acquire Korea’s top shoe fabrics maker Deal would mark first South Korean buyout by North Asia-focused PE firm in two years

Translated by Ryu Ho-joung 공개 2021-11-30 08:14:06

이 기사는 2021년 11월 30일 08:06 더벨 유료페이지에 표출된 기사입니다.

North Asia-focused private equity firm MBK Partners is in talks to acquire a South Korean footwear fabrics maker for global sportswear brands as it ramps up dealmaking efforts in the country.

MBK Partners is in advanced discussions to acquire the management rights of Dongjin Textile, industry sources said. The two sides have largely agreed on the deal structure, with details under final negotiations.

Founded in 1968, Dongjin Textile is South Korea’s top manufacturer of fabrics used for sport shoes, counting Nike and Adidas among its customers. Choi Woo-chul, the company’s chief executive and the son of founder Choi Byung-kil, is the largest shareholder with a 36.69% stake.

The Busan-based company has experienced rapid expansion since it built a plant in Vietnam in 2008 as the facility supplies fabric products directly to Nike’s and Adidas’ plants there.

Dongjin Textile recorded 57.4 billion won ($48 million) in earnings before interest, taxes, depreciation and amortization (EBITDA) on revenue of 171.3 billion won in 2020 on a consolidated basis. Based on an assumed enterprise value (EV) to EBITDA multiple of 10 times – represented by the price paid by VIG Partners when it bought footwear material maker Youyoung Industries in early 2018 – Dongjin Textile’s EV is roughly estimated to be 600 billion won.

Dongjin Textile had been named as a potential takeover target in 2018, with the company then reportedly seeking to sell itself and another shoe fabrics maker Kyungjin Textile – whose largest shareholder is one of the Choi family members – as a package.

MBK Partners, the private equity firm focused on companies in South Korea, China and Japan, is seeing Dongjin Textile as a new investment opportunity, rather than a bolt-on acquisition.

In South Korea, MBK Partners has more focused on the management of its portfolio companies and exit activity than investing over the past two years. However, it has been actively exploring investment opportunities in the country since early this year.

If a deal is signed with Dongjin Textile, this would mark the private equity firm’s first South Korean buyout since its acquisition of Lotte Card in 2019. MBK Partners is also nearing a deal to buy KoreaCenter, which is the new owner of price comparison platform Danawa. (Reporting by Hee-yeon Han)
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