This article was published on Jan. 3, 2025, at 5:03 p.m. on the CHOSUNBIZ Money Move (MM) site.
Irepharm, an egg processing company, which is primarily owned by the National Agricultural Cooperative Federation, will be sold to a farming corporation. Irepharm has built a stable sales network supplying eggs to GS25 and GS Supermarket, which are affiliated with GS Retail.
According to investment banking (IB) industry sources on the 3rd, Irepharm and Deokyeon recently signed an investment agreement for a merger and acquisition (M&A). The investment will proceed in the form of a third-party allocation of a paid-in capital increase. It appears that the structure will involve the cancellation of existing shares held by the current shareholders, allowing Deokyeon to become the largest shareholder.
Founded in 2004, Irepharm is involved in the poultry and egg product manufacturing, as well as egg wholesale and export businesses. The company operates its headquarters and farm in Bonghwa-eup, Gyeongsangbuk-do, and a livestock product processing plant in Icheon, Gyeonggi-do. Irepharm sources normal eggs (jeongran) and off-grade eggs for food processing from farms, processes them into egg pancakes and egg rolls after liquid egg processing, and supplies them to the GS Lunchbox factory.
Irepharm has established a stable supply chain including sales channels affiliated with GS Retail. As of 2023, it is reported that the sales proportion from GS Retail affiliates accounts for about 89.4%. However, during the COVID-19 pandemic, the company experienced poor sales, resulting in a deterioration of liquidity, and ultimately it was put up for sale in the M&A market. Last June, it sold its Bonghwa farm for 4 billion won.
According to the Financial Supervisory Service's electronic disclosure system, Irepharm's total capital at the end of 2023 is minus (-) 1.5 billion won, indicating a complete capital erosion. The sales and operating profits are reported to be 5 billion won and 257 million won, respectively. During the same period, the company’s deficit reached 12.7 billion won. In 2021, Irepharm underwent corporate rehabilitation, resulting in changes in its shareholder composition, which includes the National Agricultural Cooperative Federation (27.3%), Daehan Feed (12.2%), and Seram Mutual Savings Bank (7.2%).
Deokyeon, which acquired Irepharm, operates a poultry business and manages a layer farm to sell table eggs. The acquisition of Irepharm appears to be an attempt by Deokyeon to establish a value chain by supplying its own produced table eggs to Irepharm, which will then be supplied to GS Retail. Irepharm plans to co-launch exclusive products with GS Networks in the future. Deokyeon’s revenue and operating profit for last year were approximately 24.5 billion won and 3.5 billion won, respectively, placing it in the upper echelon of the industry.