Homeplus pleads for 'good-faith buyer' as resale process restarts

Sale covers 67-store hypermarket business and closed-store real estate

Union calls on government to find new buyer by March or April next year

Worsening retail conditions raise urgency; opposition forum targets MBK

"The government must step in and find a good-faith buyer. The people coming forward now are mostly interested in selling off the real estate and assets." — Ahn Su-yong, head of the Homeplus chapter of the Mart Industry Workers' Union

Calls are growing for the government to intervene actively in the renewed merger and acquisition process for Homeplus. The concern is that an M&A proceeding ignored by the market — at a time when the company has lost its competitive edge — could in effect lead to Homeplus being dismantled. The union, politicians and academics alike have voiced support for government-level assistance.

Ahn made the appeal at a National Assembly forum held Friday at the Assembly members' office building, organized by the Democratic Party of Korea's Euljiro Committee and others. The forum was titled "Holding Private Equity Fund MBK Accountable and Achieving a True Recovery for Homeplus." He urged the government to take the lead in finding a new acquirer no later than March or April next year.

"People think that leaving it to the market will get the M&A done, but that is absolutely not how it will play out," Ahn said. "The government needs to mobilize every policy tool at its disposal to send a positive signal that makes acquiring and normalizing Homeplus possible."

He added that the government should deploy "everything it can — policy financing, tax support, participation by public institutions — so that a potential buyer feels less burdened by the acquisition and can commit to long-term investment."

Homeplus recently launched a sale process covering its hypermarket business — including online operations and headquarters — as well as its real estate holdings. It is the first sale attempt since the Seoul Bankruptcy Court approved the rehabilitation plan on Sept. 2. Sale manager Samil PwC has already sent investment teasers to a pool of potential acquirers. The hypermarket business centers on 67 currently operating stores, while the real estate portion covers 19 company-owned properties from previously closed locations.

Calls for government support in the Homeplus sale are not new. The retail market has been reshaping itself around online channels for years, steadily worsening conditions for offline formats such as hypermarkets. Even in fresh-food grocery shopping — once a hypermarket stronghold — convenience stores have been gaining ground alongside e-commerce players. After Naver and Kurly joined forces, financial platform Toss has now entered the grocery competition as well.

Ahn Su-yong, head of the Homeplus chapter of the Mart Industry Workers' Union [Yonhap]

Homeplus' earlier sale attempts have already ended in failure. A pre-approval M&A push launched shortly after the company filed for court receivership in March last year collapsed when no one submitted a final bid. Its supermarket division, Homeplus Express, was sold to NS Home Shopping — an affiliate of Harim Group — for 120.6 billion won ($87.1 million) in May, but the loss of that profitable unit has dimmed the company's overall appeal to potential buyers.

Experts are united in calling for deregulation of the hypermarket sector. Hypermarkets are currently required to close twice a month and are barred from operating between midnight and 10 a.m. Bills to ease those restrictions have been stalled in the National Assembly for months. Lee Jong-woo, a professor of retail marketing at Namseoul University, said in an interview that amending the Distribution Industry Development Act to free up the suppressed hypermarket sector and create a favorable atmosphere for the Homeplus sale was necessary. He added that incentives for employment succession and local economic revitalization should be offered when a business is transferred.

The government plans to announce a coexistence framework for large and small retailers before the end of the year, incorporating views from hypermarkets, traditional markets and small merchants in neighborhood commercial districts. Whether that announcement will reignite discussions on easing hypermarket regulations remains to be seen.

At the same forum, participants also raised the idea of bringing in a third-party administrator — or replacing the current management entirely — to oversee the rehabilitation process.

Rep. Min Byeong-deok, chair of the Democratic Party's Euljiro Committee, questioned whether it was right to leave Homeplus' current management in place, or whether control should be handed to a third party such as Uamco (United Asset Management Corp.), which had been considered in the past. "Uamco found it difficult and declined before, but its circumstances may have changed — so should we not try again?" he said.

Kim Nam-ju, a senior attorney at law firm Dodam, argued that it was not desirable for MBK, which bears responsibility for the mismanagement, to continue holding control and keeping its management team in place. He proposed that at minimum, the chief restructuring officer should be selected from a court-managed pool of CRO candidates in consultation with the creditors' committee, with greater court oversight. Ahn responded that while a complete management overhaul would be ideal, "MBK would simply walk away," and said a third-party supervisory body needed to be brought in alongside the existing structure.

A notice about mandatory closure days posted at a hypermarket in Seoul [Yonhap]

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