Korean fast-food brand Mom's Touch joins the M&A market crowded with fast-food offers

[Source: Mom’s Touch & Co.]

South Korean home-grown fast food restaurant chain operator Mom’s Touch & Co. has been put up for sale after it voluntarily exited from the Kosdaq market last month as its owner Seoul-based private equity firm KL & Partners seeks to cash out from the local struggling fast-food market against popularity of premium burgers.

According to multiple industry sources from the investment bank industry on Tuesday, KL & Partners through an accounting firm sent out teaser letters to major private equity firms and corporations to tap prospective buyers.

It is offering 79 percent stake in Korea F&B Holdings Ltd., a special purpose company set up by KL & Partners for Mom’s Touch and management control. The sale price is estimated at around 1 trillion won ($774 million).

The sale comes less than one month after the fried chicken chain operator withdrew itself out of Kosdaq market in May upon endorsement from shareholders.

The stake for offering can increase as Korea F&B Holdings is buying minority shareholders’ shares until December 1 to compensate them.

The private equity firm brought the controlling stake in December 2019 through the backing of public institutions Pension Service and Korea Federation of Community Credit for 200 billion won.

Mom’s Touch earnings improved sharply under KL & Partners ownership. Its operating profit more than doubled to 39.4 billion won last year from 19 billion won in 2019, on sales of 301 billion won.

The search of a prospective buyer may not be easy as there are other handful fast-food names in the sale block.

Burger King, McDonald’s Korea, and KFC are put up for sale. The sale of Burger King has been suspended after failing to find buyers since early this year.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]