Able C&C sale put on hold as business performance recovers

[Courtesy of IMM PE]

South Korean cosmetics company Able C&C Co. put its sale process put on hold amid a notable uptick in its financial performance and the expected resurgence of Chinese tourists.

IMM Private Equity (PE), Able C&C’s majority shareholder, suspended the company’s sale process according to sources on Tuesday.

IMM PE had been working to look for a new owner since March 2023, when it conducted a preliminary bidding round and shortlisted qualified potential buyers. The private equity firm was reportedly under pressure from creditors to sell Able C&C as its business performance deteriorated.

But the company’s recent financial results have shown a remarkable improvement. According to an electronic disclosure filing with the Financial Supervisory Service (FSS), Able C&C’s operating profit for the first half of this year came to some 7.8 billion won ($5.87 million), more than doubling from the 2.9 billion won during the same period last year. Revenue for the same period also increased by 13 percent, from 121.6 billion won to 137.7 billion won for the same period. IMM PE and its creditors thus reportedly agreed to halt the existing sale process and intend to restart the sale from scratch once the financial recovery is fully realized.

IMM PE acquired Able C&C for about 400 billion won in 2017 as the company faced significant revenue declines coinciding with the aftermath of China’s retaliatory measures against South Korea following the deployment of a THAAD missile defense system and the Covid-19 pandemic. Able C&C’s stock price plummeted from around 43,636 won when acquired by IMM PE to a 4,000 won range last year.

But IMM PE persevered in improving the company’s value even amid the sharp drop in revenue. Rather than waiting for the Chinese market to recover, Able C&C shifted its focus to potential customers in the United States and Japan.

Able C&C’s cosmetics exports, which made up around 18.1 percent in the third quarter of 2017, increased to 58.65 percent in the first half of 2023. The company’s decision to use actress Elizabeth Olsen as a model for its premium brand, along with the launch of new premium brands, including “The Avengers” series, played a significant role in this uptick. With the resumption of the Chinese tourist inflow in August, it is expected that sales to the Chinese market will also increase. The company’s stock price surged to a 14,000 won range after it recently announced a dividend of 1,270 won per share.