After Homeplus Co. applied for court receivership at the Seoul Bankruptcy Court on Mar. 4 and failed to find a buyer for more than nine months, it shifted direction from a bulk sale (package sale) to selling off business units separately. The idea is to sell the relatively attractive corporate supermarket (SSM) "Homeplus Express" on its own, then resume a merger and acquisition (M&A) of the core company after the rehabilitation plan is approved.
With the Homeplus Co. labor union recently stepping back by accepting the possibility of some restructuring, the industry is watching to see whether existing supermarket operators such as GS, Lotte, and Emart will join the race to acquire Homeplus Express.
According to the retail industry and, according to legal sources, the sale of Homeplus Co.'s Homeplus Express is expected to kick off in earnest starting on the 29th of this month. The Rehabilitation Division 4 of the Seoul Bankruptcy Court (presiding judge: Chief Judge Jeong Jun-young) held a procedural consultative meeting on the 24th regarding the Homeplus Co. receivership filing and received a report from Homeplus Co. on a rehabilitation plan that includes the "separate sale of Express" and "post-approval M&A."
There, Homeplus Co.'s court-appointed managers said they plan to submit their own rehabilitation plan on the 29th, including details on separating and selling the Homeplus Express division and the M&A process after approval. The meeting was attended by Meritz Securities as the representative creditor, Samil PwC as the sale manager, the Homeplus Co. labor union, and Kim Nam-geun, a lawmaker of the Democratic Party of Korea on the National Policy Committee.
Since the start of the corporations rehabilitation process in March, Homeplus Co. has pursued a pre-approval merger and acquisition with the court's permission since June. However, no bidders submitted acquisition proposals in the main bid that closed on the 26th of last month. Even Harex InfoTech, an artificial intelligence (AI) company that had taken part in the preliminary bid, and real estate developer Snowmad pulled out. A possible acquisition by NH Nonghyup, floated mainly in political circles, also failed to materialize.
At the consultative meeting, Homeplus Co. singled out the SSM division as the target for a partial sale because it is considered the most attractive asset. Homeplus Co. is in urgent need of cash as its liquidity has deteriorated to the point of falling behind on utilities such as electricity bills, and this month it even partitioned employee wage payments, reflecting intensifying management pressure.
As of September this year, Homeplus Express ranks around third with 297 offline stores nationwide. Of these, 222 stores—about three-quarters—are concentrated in the Seoul metropolitan area, including Seoul and Gyeonggi. The No. 1 player in the segment is GS The Fresh, with 581 stores nationwide. Lotte Super (342) and Emart Everyday (243) rank second and fourth, respectively.
For these operators, acquiring Homeplus Express would instantly expand their store count and trade area coverage. Synergies could also be expected from expanding PB (private brand) products and combining with short-distance delivery.
However, most SSM operators in Korea are already located in the Seoul metropolitan area or densely populated dwelling areas, raising concerns that consolidating overlapping trade-area stores after an acquisition will be unavoidable. If stores with overlapping locations are merged and closed, it could escalate into an employment issue.
A separate sale of Homeplus Express had already been thwarted once. MBK Partners and Homeplus Co. selected Morgan Stanley as the sale manager in June last year and began work to sell Homeplus Express. The discussed sale price at the time was reportedly in the range of 800 billion to 1 trillion won.
But as the broader retail sector entered a restructuring phase at the time, corporations cited as potential buyers successively denied acquisition rumors, and the Homeplus Co. union strongly opposed a separate sale, stalling the talks. In the end, when Homeplus Co. entered court receivership in March, the sale process reset to square one.
In the industry, the view is that unless Homeplus Co. significantly lowers the sale price, the acquisition appeal is weak. "Across offline retail, the mood is to focus on strengthening competitiveness in existing businesses rather than making large-scale investments in new ones," a retail industry official said. "It is doubtful any company would proceed with an acquisition while accepting excessive losses."
As a sense of crisis deepens across Homeplus Co., the union—which had set "employment succession" for staff as a condition for approving a pre-approval M&A—has also stepped back, saying it is willing to accept restructuring. In a recent statement, the union said, "We know the M&A process will not be smooth. We acknowledge that we will have to undergo a very painful process, including restructuring. We will work together to find reasonable solutions through amicable consultations."