Unison Capital could bag US$442 million for Gong Cha deal
In this article (4)
South Korean private equity firm Unison Capital is selling its Gong Cha bubble tea franchise in a deal likely to fetch up to US$442 million. The company purchased the brand four years ago for KRW34 billion ($30 million), before taking over its global headquarters in Taiwan in a KRW40 billion ($35.45 million) deal in 2017. The brand’s HQ operates stores in 16 countries.
The offer has attracted interest from major South Korean F&B players, considering the brand’s stable cash flows and EBITDA margin of 24–25 per cent, compared with Starbucks’ 21 per cent.
The brand runs 448 outlets within South Korea, and derives 70 per cent of its sales from directly managed stores within Korea and Japan. The firm plans to expand its global store count from 900 to 1700 by 2021, expanding into 10 more countries during the period – with concrete plans to establish stores in the UK, Mexico, Thailand, Indonesia and Cambodia.
Sales are forecast at KRW180 billion ($159.54 million) this year, compared to KRW134 billion ($118.77 million) last year.
Questions & Answers
Q.How much profit could Unison Capital make from selling Gong Cha?
How much profit could Unison Capital make from selling Gong Cha?
Unison Capital purchased the brand for $30 million four years ago, then acquired its global headquarters for $35.45 million in 2017. The current sale is expected to fetch up to $442 million, representing a significant return on their total investment.
Q.What makes Gong Cha an attractive acquisition target for F&B companies?
What makes Gong Cha an attractive acquisition target for F&B companies?
The brand is appealing due to its stable cash flows and strong EBITDA margin, which stands at 24-25 per cent. This compares favourably to Starbucks' 21 per cent margin, indicating good financial health and operational efficiency.
Q.What are Gong Cha's growth plans for the near future?
What are Gong Cha's growth plans for the near future?
The firm aims to nearly double its global store count from 900 to 1700 by 2021. This expansion includes entering 10 new countries, with specific plans for stores in the UK, Mexico, Thailand, Indonesia, and Cambodia.
Reader pulse
Is bubble tea's rapid growth sustainable?
16,146 votes so far