The 58% equity of the food ingredient and meal service company OURHOME has ultimately been acquired by Hanwha Group. Hanwha Hotels and Resorts announced on the 11th that it signed a sales contract for 58% of the OURHOME equity. As soon as Hanwha Group revealed its review of the OURHOME acquisition, the market reacted with assessments of a 'rash takeover,' but the acquisition proceeded as planned. The purchase price of 65,000 won per share fueled the assessment of this being an imprudent deal. Given the market capitalization of OURHOME's competitors, there are concerns that this price is excessively high.
In the business community, there were evaluations that Hanwha Group would withdraw from reviewing the acquisition due to years of intense conflicts among shareholders at OURHOME. Notably, the intention of the former vice chairman Gu Ji-eun to oppose the sale of equity was clearly evident. A business insider noted, "Recently, some private equity funds have actively engaged in management disputes, but it is generally a rule in the business world not to interfere in domestic family disputes."
Nevertheless, why does Hanwha Group insist on acquiring OURHOME? Why would it propose to acquire even 58.6% of the total equity? The business and investment banking sectors identify three main reasons.
Reason 1: "Diverse applications when Hanwha meets OURHOME"
On the 12th, a study of analyses from Hanwha Group and consulting firms suggested that Hanwha Group determined there are many opportunities for synergy with OURHOME. They are particularly looking forward to collaborations with Hanwha Galleria and Hotels and Resorts. A Hanwha Group official stated, "We can collaborate with OURHOME in the distribution sector, food service, regionally specialized industries, and specialty products business."
It could also grow alongside Hanwha Food Tech. Food Tech is the future growth engine highlighted by Vice President Kim Dong-sun. To foster the food tech industry, Hanwha Hotels and Resorts has newly launched a food service subsidiary called 'The Tasteable' under Hanwha Food Tech. Aggressive moves such as acquiring the U.S. robot pizza brand 'Stella Pizza' and establishing a research and development center continue. An investment banking industry insider stated, "OURHOME has nine factories and 12 logistics centers," adding, "There will be a synergy when the tech capabilities are integrated at various locations." This implies that food tech will build up performance while OURHOME's efficiency will be doubled.
Through OURHOME, there is also a possibility to shed the label of being a 'domestic company' often cited as a limitation in distribution and food service. In 2018, OURHOME acquired Hako, the in-flight meal service company of Hanjin Heavy Industries Group, for 98 billion won. Through Hako, OURHOME provides in-flight meals to global airlines in 10 countries, including Singapore, Japan, and Turkey. In 2021, it signed a contract for the consignment operation of a cafeteria for the U.S. Postal Service.
A Hanwha Group official stated, "Upon analysis, we reached the conclusion that it will be easier to expand into overseas business." Additionally, the fact that OURHOME, a meal and food ingredient company, can generate stable cash flow seems to have fueled the willingness to acquire.
According to the minutes from the board meeting of Hanwha Hotels and Resorts, it was noted in the board meeting held on the 11th that "it is necessary to acquire the equity of OURHOME's management rights to strengthen the capabilities of the F&B sector and secure new growth engines through synergy with other business sectors like food and lodging."
Reason 2: "There are no alternatives among other meal and food ingredient companies"
The conclusion to invest more than 1.5 trillion won to buy OURHOME at 65,000 won per share was also influenced by the rarity of meal and food ingredient companies available for mergers and acquisitions.
OURHOME possesses capabilities to handle the entire process from production, inspection, distribution, logistics, inventory management, and on-site operations in food ingredient distribution. It has nine factories and 14 logistics centers nationwide, facilitating food ingredient logistics from any project site in the country. It is considered the most well-equipped in terms of infrastructure among domestic food ingredient companies.
A Hanwha Group official remarked, "There is a need for meal and food ingredient companies, but there aren't particularly any candidates for sale, from large conglomerate affiliates to mid-sized and small businesses." They added, "While there are serious conflicts among shareholders that pose obstacles, we believe that if handled legally, there will be no problem. Since it's a company that will eventually come to market, we thought we could adequately prepare and began the acquisition process." This is also one of the main reasons why Hanwha Hotels and Resorts is making an effort to acquire at least 58.6% equity.
Hanwha Group is already anticipating legal disputes. The legal representatives of former Vice Chairwoman Gu Ji-eun, excluding major law firms, have been entrusted with the interpretation of legal principles while proceeding with the matter. A Hanwha Group official stated, "There is a high possibility that Gu Ji-eun, who has opposed the sale, will raise a provisional injunction citing the rights or procedural defects of the preemptive purchase right outlined in the articles of incorporation," adding, "We plan to respond jointly with the OURHOME shareholders who signed the sales contract."
Reason 3: Accelerating succession clock of Hanwha Group, need for expansion of 'third son affiliate'
The acceleration of the succession clock at Hanwha Group is another reason for the necessity of acquiring OURHOME. The three brothers of Hanwha Group are organizing their equities, and the outline of business restructuring is gradually emerging. As Hanwha Aerospace has begun acquiring additional equity in Hanwha Ocean, the succession structure for Chairman Kim Seung-yeon's eldest son, Vice Chairman Kim Dong-kwan, is solidifying. The second son, Kim Dong-won, president of Hanwha Life, and the youngest son, Kim Dong-sun, vice president of Hanwha Galleria, are each expanding their footholds in finance and distribution.
In the long term, equity organization work will also be necessary. Various techniques such as spin-offs and mergers will be employed, with the financial capacity of each of the Hanwha Group brothers potentially being a variable.
A business insider stated, "The scale of distribution and food service businesses is relatively small compared to solar power, defense affiliates, and finance," adding, "Vice President Kim Dong-sun finds himself in a situation where some degree of expansion is necessary." This means that expanding their scale will provide greater maneuverability in future equity organization processes. Even if it takes time to engage in legal disputes with the former Vice Chairwoman Gu Ji-eun regarding the acquisition of OURHOME's equity and to fully secure management rights through actions such as capital increase, this is the reason for initially acquiring over 50% equity in OURHOME.