The main bid for the acquisition and merger (M&A) of domestic online video service (OTT) corporations Watcha closes on the 22nd.
According to the investment banking (IB) industry on the 21st, the Seoul Bankruptcy Court will close the open competitive bidding for Watcha on the 22nd. The selection of a preferred bidder is said to be likely on the 29th of this month. Once the preferred bidder is selected, Watcha's new owner will be decided after the main contract.
The timeline of up to one week from the main bid to the selection of a preferred bidder is faster than a typical M&A. However, insiders said it is not unusual in rehabilitation proceedings, where schedules are often compressed for a swift sale. As Watcha is a completely capital-impaired corporation, it appears aimed at minimizing damage to corporate value.
Samjong KPMG is serving as the lead manager for the sale of Watcha. In a preliminary bid that involved submitting a letter of intent (LOI), CJ ENM and a consortium with the content recommendation platform Kinolights were among the participants. There are said to be additional candidates beyond the two.
The industry views the entry of CJ ENM into the race as boosting Watcha's chances of rehabilitation. With Tving, CJ ENM is seen as seeking synergy with Watcha in its existing OTT business.
Initially, CJ ENM sought to merge with the domestic OTT Wavve but ultimately failed and is said to have turned to Watcha. This is because KT, a major shareholder of Tving, did not agree to the Wavve merger.
Kinolights, which operates a content review and rating service while expanding its film distribution business, also has room to secure business overlap with Watcha. However, Kinolights recorded operating losses of about 500 million to 1.9 billion won from 2021 to 2024. For this reason, it is known to have participated as part of a consortium with a financial investor (FI).
Founded in 2011, Watcha launched a streaming service in 2016 after starting with a personalized movie recommendation service. It drew users by gaining popularity with its movie rating service, among others. However, competition in the OTT market intensified. Amid this, its performance deteriorated and it faced a liquidity crisis, leading it to enter rehabilitation proceedings starting last year.