이 기사는 2019년 11월 29일 08:00 thebell 에 표출된 기사입니다.

South Korea's Hanwha Hotels & Resorts plans to sell its food service operations to local private equity firm VIG Partners after a long, drawn-out sale process.

VIG Partners announced Monday that its portfolio company Winplus signed an agreement to purchase Hanwha Hotels & Resorts' food service business unit for about 100 billion won ($85 million). The deal is the first bolt-on acquisition made by Winplus, a local foodstuffs retailer in which the private equity firm bought a controlling stake last March via its third fund.

It was about six months ago that South Korean conglomerate Hanwha Group's hospitality and leisure business arm put its food service operations on the market as part of plans to sell off its non-core business units. The company hired Samjong KPMG to lead an action process.

At the beginning, the seller's target price was said to be at around 200 billion won ($170 million). This seemed achievable at first, with several strategic investors, including CJ Group's food distribution and catering affiliate CJ Freshway Corporation, reportedly expressed their interest in the proposed sale. Three bidders - Glenwood Private Equity, Affirma Capital and CJ Freshway - participated in the first round of the auction held in June. The offer price, however, was far less than the seller's target price, and the gap remained unchanged while due diligence was conducted. Consequently, only CJ Freshway made a binding offer in the final round of the action held in July, with the other two dropping out of the bidding process.

Hanwha Hotels & Resorts and CJ Freshway had reportedly been in final negotiations, though the deal ended up being canceled in October. It was due to the latest change in CJ Group's overall business strategies with a focus on enhancing profitability, which led to curbing mergers and acquisitions by its affiliates. Thereafter the sale process was changed from a public auction to a private deal.

Having learned the news that the transaction fell apart, VIG Partners contacted Hanwha last month, which was a welcomed move for the seller. The private equity firm decided the acquisition would generate synergy with its Winplus. The sale process between the two sides so far has been expedited, as Hanwha has been already well prepared for due diligence, after going through a previous auction process.

Hanwha's food service business unit, which posted 718.3 billion won ($609 million) of revenue last year, consists of three departments: institutional catering service, foodstuffs retailing and food concession. Among them, VIG Partners bought only two departments, except food concession, both of which amounted for about 84 percent (600 billion won) of the unit's total revenue in 2018.

VIG Partners focuses on the growth potential of the domestic food and grocery retail market, which is facing consolidation with the country's conglomerates beginning to enter the market. This also explains why the private equity firm acquired Winplus last year.

With this bolt-on acquisition, the private equity firm's portfolios of food and grocery retail business are expected to strengthen market position in the sector. The transaction is expected to complete around February next year.

(By reporter Han Hee-yeon)