Blog: Hannah AbdullaOrion mulls foray into retail with Tesco South Korea bid

Hannah Abdulla | 15 June 2015

South Korean snack maker Orion is reportedly planning to make its first foray into retail with the acquisition of Tesco's South Korean unit, Homeplus.

The company told Reuters it is considering a bid for Homeplus but has made no decisions on whether to pursue a formal offer. The deal - if it were to go ahead - would mark Orion's first such venture in retail.

Orion has a presence in the confectionery and snacks industry, where it manufactures biscuits, caramel, gum and bakery items. It also has a presence in the entertainment sector and owns TV channels and it owns the Market O restaurant chain. It also has an involvement in sports in South Korea.

Tesco's operations in Korea are the largest outside of the UK with over 400 stores, 500 franchise stores and over six million customers served a week. It pulled in revenues of US$6.3bn in 2014. The UK retailer is in the midst of a recovery plan following an accounting scandal it was caught up in last year. The company is working to turn around its domestic operations as it - along with the other major retailers - fights to claw back market share lost to discount retailers in the UK. A sale of the unit would be the easiest way to cut debt and strengthen the balance sheet.

Orion is facing competition from a number of private equity firms that have also submitted bids. A PE firm acquisition would likely see money made from the valuable property assets through sale-and-leaseback agreements.

Reuters has listed KKR&Co and Carlyle Group among bidders, with London's CVC Capital Partners, Hong-Kong's Affinity Equity Partners and Asia's MBK Partners also reportedly invited to bid.

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