IMM Private Equity is trying to sell off the management rights of Able C&C, the parent of Korea’s first-generation low-priced cosmetics brand Missha, at half its purchase price, according to people familiar with the situation on Thursday.
The Seoul-based PE house has embarked on the sale process after selecting Credit Suisse as the sale manager. It puts its entire 59.2% stake in Able on the market for about 200 billion won ($150 million), or half the 400 billion won it paid to acquire the stake.
Able’s flagship brand Missha was among the homegrown cosmetics brands that led Korea's burgeoning beauty market in the early 2000s.
IMM acquired its shares, including a 25.5% stake from founder and ex-Chairman Seo Young-pil, in 2017 and then increased its ownership to 59.2% through a rights offering and a public tender offer.
But a sharp decline in Chinese tourists to Korea took a heavy toll on local cosmetics companies, after
China curbed trade and imports from Korea in retaliation for Seoul’s announcement in 2016 it would deploy a US-made Terminal High Altitude Area Defense System (THAAD).
The rise in online shopping and consumers’ shift toward high-end brands dealt further blows to the low- to mid-priced cosmetics market.
Able’s operating profit shrank by one-sixth to 1.8 billion won in 2019 from 11.2 billion won in 2017. Last year, it reported a 22.3 billion won loss following shortfalls of 67.9 billion won a year earlier.
In response, starting in June last year, Able restructured its offline business by slashing the number of brick-and-mortar stores in half to 327 by the end of 2021.
Offline sales now account for nearly 40% of its total revenue, down from 63% in 2019. In its place, it has boosted overseas and online sales. The company swung to a 3 billion won operating profit in the first half of this year.
Its acquisition candidates include rival companies that are seeking to shore up their product lineup and
fashion platforms such as Musinsa that have launched private-label cosmetics products.
The sale price proposed by IMM is slightly more than twice its market value. The Kospi-listed stock trades at about eight times its forward EBITDA.
On Friday morning, shares of Able spiked 12% to 6,500 won after The Korea Economic Daily reported that its largest shareholder has put its stake up for sale.
Write to Jun-Ho Cha at
chacha@hankyung.comYeonhee Kim edited this article
