Shareholders in South Korea’s Hi-mart Co Ltd (071840.KS) have rejected a request by private equity fund MBK Partners to extend its exclusive negotiating rights to a majority stake in the electronics retailer, reopening the door to Lotte Shopping Co Ltd (023530.KS).
Although MBK had reportedly offered as much as $1.1 billion for the stake, retailer Lotte has been regarded by the market a better fit for Hi-Mart and the news sent Hi-mart shares surging nearly 7 percent higher.
The sellers, Hi-Mart’s largest shareholder Eugene Corp (023410.KQ) and two other shareholders are expected to turn to other bidders, said a source with direct knowledge of the matter. The source declined to be identified as he was not authorised to talk to the media.
Just last week, Seoul-based mid-market buyout fund MBK was picked as the preferred bidder for the 65.3 percent stake being sold after offering as much as 1.25 trillion won ($1.1 billion), according to local media reports.
MBK’s bid would have made it among Asia’s top three private equity deals this year.
Korean media reports said MBK had bid over 80,000 won per share for Hi-mart, but the stock had fallen 21 percent since the bidding closed on June 20 on disappointment that Lotte was not the preferred bidder and after weak earnings. It closed at 48,350 won on Monday.
Founded in 1987, Hi-Mart is the country’s biggest electronics retailer and operates about 290 stores, controlling 35 percent of the market, ahead of Samsung Digital Plaza.