| A Mom's Touch branch in Seoul / Newsis |
By Anna J. Park
Various global private equity firms have joined the bidding war to acquire Mom's Touch, a Korea-headquartered chicken burger chain, due in part to their favorable positions created by the strong U.S. dollar. New potential buyers could emerge any time, as the sales process is currently being conducted on a rolling basis, meaning applications for acquisitions will be reviewed as they come in, rather than waiting for a certain date to judge them all at once.
According to the investment banking industry, Monday, U.S.-based Goldman Sachs PIA and Asia-focused PAG have submitted their bids for the franchise business, currently owned by KL & Partners, a Korea-headquartered private equity firm.
Goldman Sachs' PIA is the financial giant's private equity unit that has made successful investments in a few Korean unicorn companies, including Baemin, a food delivery application, and Zigbang, a real estate information platform.
PAG's bid for Mom's Touch is its first salient acquisition attempt in the domestic M&A market since it sold Youngtoys, a local toy company, in August 2020. The private equity firm participated in a few acquisition bids, including for Koentec and Juvis, only to lose out to other competitors.
U.S.-headquartered Yum! Brands, which owns global franchises like KFC, Taco Bell and Pizza Hut, is also bidding for Mom's Touch. The brand operates over 53,000 restaurants in over 155 countries.
Market insiders attribute the predominance of the global private equity firms and international franchise companies in the bidding process to both the strong dollar as well as the future global growth strategy of Mom's Touch. The fast food chain opened up its first Thai branch last month, and plans to increase the number of its U.S. branches to over 100 by 2025. Currently, it operates two branches in California.
KL & Partners acquired Mom's Touch in late 2019 for around 200 billion won ($149 million). Since taking over, the business has been posting solid growth, logging an annual revenue of 301 billion won last year and an operating profit of 39.4 billion won. Given that the franchise firm operates 1,354 branches, the highest number among fast food chains, the selling price is estimated to be around 1 trillion won.