South Korea’s private equity firm SkyLake Investment, which won an about $220 million mandate from the National Pension Service (NPS) this week, has been chosen as the preferred negotiator to buy the Korean operations of Outback Steakhouse, in a deal estimated to be worth $50 million, according to investment banking sources on June 29.
The Nasdaq-listed Bloomin’ Brands, based in Florida, picked SkyLake, headed by former Samsung Electronics’ Digital Media President Daeje Chin, as the preferential negotiator for the whole of the Korean operations of Outback Steakhouse. Both sides will sign a sales and purchase agreement (SPA) as early as July 1, the sources told the Korea Economic Daily.
SkyLake, managing 2 trillion won ($1.7 billion) of assets, has recently briefed the NPS and other limited partners of the private equity firm on the acquisition plan.
The prospective sale is estimated to be worth around 55 billion won ($48 million), down sharply from the 400 billion won range that Bloomin’ Brands had reportedly hoped to fetch in 2010 when it tried to sell the Korean operations of the Australian-themed restaurant.
A South Korean department store chain, Hyundai Department Store, had shown interest in the deal, but recently dropped out of the bidding over a price difference and other undisclosed reasons.
Outback Steakhouse is the largest family restaurant chain in South Korea with an about 23 percent market share in the second half of last year. Since its arrival in Seoul in 1997, it had led a family restaurant boom in the country, along with T.G.I. Friday’s and Bennigans. It now runs 76 stores nationwide, down from the peak of 110 in 2013. Its competitors also have scaled back their Korean operations on the back of falling sales amid a prolonged economic slowdown. Sales of the Korean operations of Outback Steakhouse shrank to about 190 billion won last year from around 250 billion won in 2013.
SkyLake Investment has specialized in M&As of manufacturing companies in the information and technology industry and parts makers since its inception in 2007. Now it is moving to expand into non-manufacturing businesses for portfolio diversification, in line with its rapid asset growth.
“The expected sale price of Outback Steakhouse Korea has fallen sharply in the past few years, despite its high brand awareness,” said an investment banking source. “It would be an appropriate investment target (for SkyLake) as its first service business.”
HSBC is advising Bloomin’ Brands on the sale.
By Soram Jung and Dongwook Jwa
<Edited by Yeonhee Kim>