Lotte Shopping CEO Kang Hee-tae poses in his office at the company's headquarters in central Seoul, last Nov. 6. Courtesy of Lotte Shopping
By Kim Jae-heun
Potential buyers of the No.2 food delivery service Yogiyo are pulling their hair out over the main bidding for eBay Korea, which has turned into a showdown between Shinsegae and Lotte.
The outcome of the takeover battle for eBay Korea is likely affect the bidding for Yogiyo, which is scheduled to begin next Thursday.
Lotte ON's new CEO Na Young-ho / Courtesy of Lotte Shopping
Lotte Shopping dropped out from the main bidding on Yogiyo last month to concentrate on the acquisition deal for eBay Korea. However, if the retail giant fails to take over the American e-commerce firm, it may return to compete for Yogiyo.
Morgan Stanley, an underwriter for the sale of Yogiyo, has opened the door for Lotte to return despite its absence in the preliminary bidding.
Currently, there are five players that made it onto the shortlist for the Yogiyo bid ― Shinsegae, MBK Partners, Affinity Equity Partners, Permira and Bain Capital.
Unlike Shinsegae, which is playing both games, Lotte is devoting itself to bidding on eBay Korea solely. Its ambitiously-launched online shopping platform, Lotte ON, has not met the retailer's expected goals during the last 14 months.
There are uncertainties about the synergy it could create with the food delivery firm, so instead of wasting energy bidding for Yogiyo, it wants to stabilize its e-commerce business by acquiring eBay Korea.
"Lotte is doing all it can to take over eBay Korea. If both Lotte and Shinsegae fail to acquire the American e-commerce firm, that is okay. But if Shinsegae acquires eBay Korea, Lotte has to prevent itself from the worst case by blocking its longtime rival from acquiring Yogiyo," an industry source said.
There is a small possibility that Lotte will join the final bidding for Yogiyo if it wins the eBay Korea deal. The anticipated price for eBay Korea reaches at least mid-3 trillion won, and Yogiyo is expected to fetch 2 trillion won. Acquiring two firms at the same time presents quite a burden for Lotte.
So, if Lotte wins, the current five players will continue their bidding for Yogiyo. However, if it fails, Lotte has no choice but to compete for the food delivery player, because Shinsegae will gain too much power in the e-commerce sector if it acquires both eBay Korea and Yogiyo.
Both MBK Partners and Shinsegae are mentioned as the strongest candidates in the takeover deal for Yogiyo.
MBK Partners, the largest private equity fund (PEF) in the Asia-Pacific region, has big funding power and so does Shinsegae through its strategic alliance with local IT giant Naver. In March, Shinsegae and Naver swapped 250 billion won worth of shares to cooperate in logistics and online retail.
If Lotte bids for Yogiyo, the food delivery player's market price may rise again. The company's value has depreciated lately due to the appearance of Coupang's delivery player Coupang Eats.
The rise in Yogiyo's price can push out other PEFs, except MBK Partners, from the competition.
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This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform.