Orchestra Private Equity to acquire KFC Korea for 60 billion won
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Orchestra Private Equity, a private equity firm based in Singapore, has signed a stock purchase agreement to acquire chicken franchise KFC Korea, according to industry sources on Friday.
Under the deal signed on Thursday, Orchestra PE will purchase a 100 percent stake in KFC Korea from KG Group, a chemical-to-steel company based in Seoul.
The transaction has an estimated worth of 60 billion won ($48.3 million) to 70 billion won.
KFC Korea has been on sale for a year by KG Group which took over the fast food chain in 2017 from another private equity firm CVC Capital Partners.
To get better control over the fried chicken chain after the acquisition, Orchestra PE signed a separate contract with Yum! Brands, the American operator of KFC to alter its operating system from direct management to a franchise system.
According to market observers, KFC has struggled to expand its presence in the country due to failure in localization as all decisions had to be made only after consulting with the American headquarters.
Questions & Answers
Q.Which company previously owned KFC Korea before KG Group acquired it?
Which company previously owned KFC Korea before KG Group acquired it?
KG Group bought KFC Korea in 2017 from CVC Capital Partners, another private equity firm. CVC Capital Partners was the owner of the fried chicken chain before the 2017 transaction.
Q.Why has KFC Korea struggled to grow its presence in the country?
Why has KFC Korea struggled to grow its presence in the country?
KFC Korea has faced challenges expanding due to its failure in localisation efforts. All operational decisions reportedly had to be made only after consultation with the American headquarters, hindering agility.
Q.What is Orchestra Private Equity changing about KFC Korea's operating system?
What is Orchestra Private Equity changing about KFC Korea's operating system?
Orchestra Private Equity will alter KFC Korea's operating system from a direct management model to a franchise system. This change aims to give them better control over the fried chicken chain after the acquisition.
Q.What is the estimated value of the acquisition of KFC Korea?
What is the estimated value of the acquisition of KFC Korea?
The transaction for KFC Korea has an estimated worth of 60 billion won, which is approximately $48.3 million. The upper end of the estimate is 70 billion won.