South Korea’s grocery delivery platform, OASiS, appears to be backing away from its proposed acquisition of the e-commerce site 11st. Reports indicate that both parties have decided not to continue discussions, having struggled to reach an agreement on key issues such as the terms of sale and stock exchange ratios. The recent financial troubles at TMON and WeMakePrice, which have led to increased scrutiny by South Korea’s financial authorities on mergers and acquisitions involving stock swaps, have further diminished the likelihood of the deal going through. OASiS had reportedly planned to acquire 11st using a stock swap method similar to Qoo10.
According to the investment banking (IB) industry, OASiS’s acquisition of 11st is effectively off the table. An industry insider commented, “The M&A was initially led by NH Investment & Securities, OASiS’s IPO underwriter, but neither the seller nor the buyer showed strong interest. The talks that were ongoing have now come to a standstill.”
The sale would have involved the entirety of 11st’s shares. Currently, SK Square holds an 80.26% stake, while a consortium comprising the National Pension Service, H&Q Korea Partners, and MG Saemaul Geumgo owns 18.18%. Since SK Square forfeited its call option on the 18.18% stake at the end of last year, the consortium has been in control of the sale. It is reported that the consortium would need to sell 11st for more than 500 billion won to avoid incurring losses.
OASiS had proposed a deal in which it would swap shares of its own stock and that of its affiliate, ROUTE, for 11st shares held by H&Q Korea Partners. The plan was for the companies to exchange shares, after which 11st would go public, allowing the consortium to exit with cash. ROUTE is an unlisted company in which Kim Young-joon, OASiS chairman and majority shareholder of OASiS’s parent company Gaeasoft, holds an 86.4% stake.
