Despite MBK's Exit, Potential Buyers Stay 'Quiet'... Will Homeplus Be Sold Off in Pieces?

Major Shareholder’s Stake Wiped Out, but Acquisition Costs Remain a Burden
Stores Halved, Voluntary Retirement Offered...Downsizing Accelerates
Further Breakup Sale Could Be an Option if Sale of All 67 Stores Stalls

The search for a new owner of Homeplus has entered a new phase after MBK Partners, its former largest shareholder, had all of its shares canceled without compensation. The interests of the former major shareholder have been resolved, but potential buyers remain cautious because of the substantial additional investment needed to restore normal operations. As Homeplus accelerates efforts to shrink its business—having cut its number of stores by half and now offering voluntary retirement—the possibility is being raised that, if the ongoing effort to sell the business as a whole fails, selling off additional parts of the business could emerge as an alternative.

According to the Seoul Bankruptcy Court and investment banking (IB) industry sources on October 12, about 2.4 million common shares held by an MBK-affiliated special-purpose company (SPC) were canceled without compensation on September 14 under Homeplus's rehabilitation plan, which was approved on September 2. MBK invested about KRW 2.5 trillion in equity when it acquired Homeplus in 2015, but lost its status as a shareholder 11 years later.

The cancellation of the shares means that the value of the former major shareholder's stake no longer needs to be considered in the upcoming capital restructuring. However, the sale currently underway is an asset deal involving the transfer of business operations, rather than an acquisition of the existing shares. In other words, the end of MBK's status as a shareholder does not automatically reduce the cost of acquiring the business.

Takeover rumors abound, but participation remains uncertain... Heavy costs of restoring normal operations

Homeplus is seeking to sell its headquarters, online business division, and 67 core hypermarket stores as a single package. Samil PwC, the sales advisor, sent investment memorandums to potential buyers in September. Naver, Hyundai Department Store Group, GS Retail, and Harim Group were mentioned in the market as potential buyers, but the companies denied the takeover rumors. There were also reports that domestic and foreign companies were considering an acquisition and that some had shown strong interest, but no official participation in the sale has been confirmed.

The biggest obstacle to securing a buyer is the funding needed to restore normal operations, in addition to the purchase price. A buyer would need to consider not only the price for acquiring the business but also the funds required to restore product supplies, replenish inventory, and invest in facilities. Homeplus is struggling to secure products because of deteriorating trading terms with suppliers. It also faces a burden from trade-related public-interest claims, including about KRW 503.2 billion in unpaid payments for goods at the time the rehabilitation plan was approved.

The rehabilitation plan sets a target of KRW 4.3 trillion in revenue and KRW 162.8 billion in operating profit by 2030. However, it is unclear how much confidence a buyer would place in these projections for improved performance. In addition to the sluggish hypermarket sector and competition from e-commerce, a buyer would also need to assess whether Homeplus can regain its previous purchasing power and logistics efficiency with its reduced store network.

A Homeplus store in downtown Seoul. Yonhap News Agency

Downsizing extends to voluntary retirement... Further break-up sale possible

Homeplus is also stepping up its restructuring efforts to reduce the burden on a buyer. The number of operating stores has fallen to 67 from 126 before the rehabilitation proceedings began. With the store count down by half and about 50% of employees on paid leave, the company has been accepting voluntary retirement applications from all employees since October 7. The application deadline is October 22, and the planned retirement date is October 31.

The plan is to improve the business's viability by reducing fixed costs, but it is uncertain whether the restructuring will make the company more attractive to buyers. Cutting labor and operating costs could improve short-term profitability, but a continued decline in stores and staff could also weaken its competitiveness.

Against this backdrop, industry sources say that if the sale of all 67 stores as a single package drags on, breaking the sale into smaller units could also be considered. Restructuring the sale by separating stores by region or by ownership status—owned versus leased—could reduce buyers' upfront funding burden and broaden the pool of potential buyers. However, no break-up sale is currently being officially pursued.

Kim Byungjoo, Chairman of MBK Partners. Yonhap News

A break-up sale also has its limits. If the most profitable stores are sold first, the viability of the remaining stores could deteriorate further. The resulting contraction of the store network could also undermine the efficiency of joint purchasing and logistics. In other words, a strategy that increases the likelihood of selling individual stores could instead reduce the prospects for Homeplus's overall rehabilitation.

The repayment of creditors is another key variable in the sale process. Homeplus plans to sell 19 closed stores it owns separately and use the proceeds to repay first approximately KRW 1.3 trillion in senior secured trust claims held by Meritz Financial Group. If real estate sales are delayed or assets are sold for less than expected, the repayment schedule could also be disrupted.

An IB industry source said, "The longer a sale of the entire business takes, the greater the pressure may be to break it into smaller units to broaden the pool of potential buyers. However, if the most profitable stores are sold first, it could become even harder to sell the remaining business. The timing and composition of the assets bundled for sale will determine the success or failure of the rehabilitation."

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