Blackstone seeks buyer for Korea’s leading drug wholesaler Geo-Young

[Courtesy of Geo-Young]

Blackstone Group, the world’s largest private equity fund (PEF) firm, has put Korea’s No. 1 drug wholesaler Geo-Young Corp. up for sale and the estimated price is expected to exceed 1 trillion won ($767.5 million).

According to industry sources on Wednesday, Blackstone has sent out a request for proposals (RFP) to major advisory firms to select an organizer for the sale of its controlling stake in Geo-Young.

The largest shareholder of Geo-Young is Cho Sunhae GY Holdings Co., which holds a 99.17 percent stake in the company. Blackstone holds a 71.3 percent stake in the holdings company, while Geo-Young co-founders Cho Sun-hae and Lee Hee-gu hold a 22.0 percent and 6.8 percent stake, respectively.

Blackstone became the largest shareholder in 2019 when it acquired Geo-Young from Anchor Equity Partners Asia Ltd. The purchase price was 1.1 trillion won at the time.

While Blackstone, which made its first trillion-dollar investment in a Korean company, is looking to divest after four years, an industry insider said, “I understand that Blackstone has contacted advisors to review the sale proposal from the investment banking industry rather than to sell Geo-Young immediately. I understand that they are looking at multiple recovery options, including not only a sale but also an initial public offering.”

Geo-Young is the No. 1 provider with 80 percent of domestic pharmacies as customers. It ranks first in the domestic pharmaceutical and bio industry in terms of annual sales. In 2020, it acquired control of Duchembio Co., which manufactures and sells radiopharmaceuticals, and in February, it acquired a 25 percent stake in Baek Je Pharmaceutical Co., the country’s second-largest wholesaler.

Geo-Young, which posted sales of 2.95 trillion won and operating profit of 51.4 billion won in 2019 at the time of Blackstone’s acquisition, became the first company in the domestic pharma and bio industry to post consolidated sales of 4.2 trillion won last year.

In particular, Geo-Young is attracting attention because it is an unusual case of a Korean company that has changed hands with three private equity firms. In 2009, Geo-Young first connected with a PEF when Goldman Sachs Principal Investment Area invested 40 billion won. Ahn Sang-gyun, who led the deal at Goldman Sachs, later moved to Anchor Equity Partners, which acquired a 46 percent stake in the company in 2013. Blackstone then bought Anchor Equity Partner’s stake for more than seven times the price, drawing attention from the market.