[Click eStock] Hyundai Department Store Secures New Growth Engine Through Acquisition of Jinus

[Asia Economy Reporter Lee Seon-ae] Shinhan Financial Investment announced on the 23rd that it maintains a buy rating and a target price of 105,000 KRW for Hyundai Department Store. The stock price on the 22nd was 76,600 KRW, indicating an upside potential of 37.1%.

The day before, Hyundai Department Store disclosed that it decided to acquire Zinus, an online furniture and mattress company. The acquisition involves purchasing existing shares (4,740,135 shares, 30% stake) and new shares (1,431,981 shares) through a third-party allotment, with a total acquisition amount of 894.7 billion KRW. After the acquisition, Hyundai Department Store will become the largest shareholder with a 35.8% stake.

Zinus is the number one mattress brand on Amazon in the United States and has high brand recognition in the global online furniture market, although its recognition is low domestically. Hyundai Department Store plans to expand Zinus's mid-to-high-end lineup through various distribution channels. Additionally, synergies are expected in raw material procurement and product design with group affiliates such as Hyundai Livart and Hyundai L&C.

Hyundai Department Store is estimated to have paid a management premium of over 100% compared to the current market capitalization to acquire Zinus's shares. The acquisition will be financed with 200 billion KRW in cash holdings and 700 billion KRW in borrowings.

Joo Sang-hoon, Senior Researcher at Shinhan Financial Investment, stated, "The acquisition of Zinus is positive in terms of securing new growth drivers. The company has taken a somewhat conservative strategy compared to competitors as a latecomer in e-commerce but is striving to differentiate itself by strengthening specialized malls. Through Zinus, an online furniture specialist, it is expected to overcome the growth limitations of the department store business and evolve into a lifestyle company."

This content was produced with the assistance of AI translation services.