MBK Partners in talks to acquire Megastudy Education

[Photo by Megastudy Education]

Megastudy Education and its subsidiary Megastudy shares gained momentum on Wednesday on news that South Korea’s leading private equity firm is in talks to buy a major stake in the country’s leading test-prep course and afterschool tutoring service provider estimated at 650 billion won ($495 million).

Megastudy Education said in a regulatory filing on Tuesday that it is negotiations with MBK Partners to discuss various options, including a sale of management rights to the PEF. According to sources, MBK Partners is reviewing an option to acquire an about 35 percent stake in Megastudy Education from owners of the leading cram school in Korea.

The majority stake put up for sale breaks down to 27 percent held by Megastudy Chairman Son Ju-eun and his brother and Megastudy Education CEO Son Seong-eun and 6 percent from Megastudy.

This is the family owners’ third attempt to sell their management rights, following failed deals in 2014 and 2020 due to differences in price and other terms.

Market sources estimate the transaction to be valued at around 650 billion won, which is roughly equivalent to 150,000 won per share, twice higher than the current stock price of Megastudy Education.

Kosdaq-listed Megastudy Education shares were up 2.48 percent at 86,900 won in Seoul trading at 10:52 a.m., and Megastudy shares were 1.77 percent higher at 11,500 won.

Megastudy Education has grown into a leading tutoring service provider in Korea by expanding its business scope to all-age groups with online and offline platforms such as Megastudy for college entrance exams, elihigh for elementary school students, Mbest for middle school students, and educational services for adults. With this diversification strategy, the company has continued to grow in sales despite a decrease in the school-age population.

Also demand for online education platforms is strong since the onset of Covid-19.

Education is one of the M&A sectors of interest for MBK Partners, which has a track record of many headline deals in the past. It joined a bid to buy language learning business Wall Street English (WSE) from Pearson in 2017 and acquired China’s Wendu Education Technology Group in 2019.

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