|Olive Young's store in Gangnam / Courtesy of CJ Group|
By Kim Jae-heun
Competition is heating up between potential candidates for the possible purchase of minority shares in CJ Group's health and beauty store Olive Young.
According to sources at investment banks in Korea, Olive Young held a session recently to appeal about the specifics of its business potential and how it helps in terms of profitability for candidates eyeing its stakes.
In accordance with the group-wide efforts to restructure unprofitable businesses, CJ Group owner families are planning to unload each of their holdings in Olive Young. Because the planned stake unloading involves group owners, Olive Young presented some "attractive offers" to those who attended the session. Details of "attractive offers" were unknown.
"Nothing was guaranteed for investors during the session. I can say Olive Young failed to convince the participants why taking up stakes matters from candidates' standpoint," an industry source said.
After separating from CJ Olive Networks last November, Olive Young has been maintaining its top position in the local health and beauty store sector. Its market share was around 50 percent and it operates 1,250 stores across the country as of October this year. Its last year revenue was 365.9 billion won and it generated 16.6 billion won as operating profit in 2019.
The total estimated value of Olive Young is about some 1.5 trillion won. The stake sale deal is about 450 billion won. Some investors are expressing concerns that the sale plan isn't attractive as the price is a bit high.
"During the session, Olive Young failed to provide any specifics relevant to its business performance. Investors are still questioning the future course of Olive Young's stock price after the company goes public," the source said.
Last month, CJ Group's health and beauty store selected Glenwood Private Equity, STIC Investments, IMM Private Equity and JKL Partners for its pre-IPO shortlist. Among local major firms, only Hyundai Department Store decided to join the competition. CJ Olive Young plans to go public on the KOSPI in 2022.