[News Space=Reporter seungwon lee] It has been reported that Dongsun Kim, Vice President and Head of Future Vision at Hanwha Hotels & Resorts, is pushing for the acquisition of Our Home. Attention is being paid to how he will create synergy in the food tech sector, which he has selected as a future food source, and whether the acquisition will be successful.

Recently, Hanwha has completed its due diligence on Our Home and is focusing on establishing detailed transaction terms with shareholders (former Our Home Vice Chairman Koo Bon-sung and Our Home Chairman Koo Mi-hyeon) who own approximately 58% of Our Home’s shares. Hanwha aims to finalize the final transaction terms by the end of the year and complete the final acquisition early.

◆ Foodtech companies declare 'growth engine'... 'Synergy' with existing businesses and robot businesses is a point of interest

Vice President Kim is the third son of Hanwha Group Chairman Kim Seung-yeon. The first son is Kim Dong-kwan, Vice Chairman and CEO of Hanwha Group, and the second son is Kim Dong-won, Chief Global Officer and President of Hanwha Life Insurance.

The distribution industry interprets this acquisition as a stepping stone for Hanwha Group to expand its food tech business. Hanwha has already acquired the robot pizza brand Stella Pizza and is also pursuing a catering robot business through Hanwha Robotics. Hanwha Hotels & Resorts owns a 32% stake in Hanwha Robotics, which was launched in October of last year.

Then, in February of this year, the company changed the name of The Tasteable, a subsidiary in the restaurant sector that operates restaurants such as '63 Restaurant', to Hanwha Food Tech, and in May, it opened a food tech research and development (R&D) center in Pangyo, Gyeonggi Province, declaring food tech as the company's growth engine.

◆ Where is Our Home... What is the share structure and acquisition amount?

Our Home is a large catering company that provides 2 million meals a day at 850 locations nationwide, ranking second in the domestic market. It has eight production facilities and 14 logistics centers nationwide. Last year, it recorded its best performance ever with sales of KRW 1.9835 trillion and operating profit of KRW 94.3 billion.

In particular, it is also standing out in the food tech field, such as research on AI-based potato peeling robots. After opening stores in China and Vietnam in 2010 and 2017, it has also expanded its global business by entering the United States in 2018 and Poland in 2021.

If the big deal is successful, the synergy with Hanwha Foodtech and Hanwha Robotics is expected to be maximized. As Hanwha Hotels & Resorts already reorganized its food distribution and catering business unit (Foodist) for 100 billion won in 2020, this acquisition review is also meaningful as a re-entry into the catering business, but it is also being analyzed as a decision focused on realizing Vice President Kim’s foodtech vision.

If this acquisition is successful, Hanwha Hotels & Resorts will restart its catering and food distribution business, which it sold for about KRW 100 billion in 2020, after five years. Considering that Our Home ranks second in the industry in market share and sales after Samsung Welstory, this is a golden opportunity to quickly rise to become a key player.

In addition, if it wins the group meal bid of Hanwha Group affiliates, it can expect additional external growth. According to the industry, the value of Our Home’s management rights and all of its shares is estimated at around 1.5 trillion won. Accordingly, the sale price of the 57.84% stake and management rights amounts to around 860 billion won.

An official in the distribution industry said, "Hanwha Group has long been considering M&A to push a new business for its third son, whose business seems relatively small compared to that of its first and second sons," adding, "It appears that Hanwha actively considered acquiring Our Home when it came up for sale after the success of Five Guys."

According to the investment banking (IB) industry on the 26th, under the leadership of Vice President Kim Dong-sun of Hanwha Galleria and the youngest son of Chairman Kim Seung-yeon, Hanwha Group is pushing for a 100% acquisition of Our Home. Currently, the 57.84% stake held by former Vice Chairman Koo Bon-sung (38.56%) and Chairman Koo Mi-hyun (19.28%) of Our Home is up for sale. It is reported that the eldest daughter and eldest son of Our Home are close to an agreement, and that the purchase of the stakes of the second and third daughters is also being discussed. It is reported that due diligence is currently underway, as well as contacting financial institutions to secure the acquisition price.

◆ What are Hanwha Group’s financing plans and challenges to overcome?

However, if former Vice Chairman Koo Ji-eun and Mr. Koo Myung-jin exercise their preemptive right to oppose the sale, the acquisition itself may become null and void. According to Our Home’s Articles of Incorporation, when a shareholder sells stocks, other shareholders have the right to purchase them first under the same conditions. Former Vice Chairman Koo Ji-eun has previously shown strong attachment to Our Home’s management, saying she will uphold the will of her father, the late Chairman Koo Ja-hak.

Another obstacle is that Hanwha Hotels & Resorts cannot secure the acquisition funds on its own. With Hanwha Hotels & Resorts’ current assets amounting to only KRW 235.6 billion, it seems inevitable that the group will need financial support or large-scale borrowing.

It is necessary to raise acquisition financing or increase capital of the parent company, Hanwha Corporation. As of the third quarter of this year, Hanwha Hotels & Resorts' total liabilities were 1.8178 trillion won, and its total capital was 1.16 trillion won, with liabilities exceeding capital. Cash assets were 129.3 billion won, and current assets including this amounted to only 235.5 billion won.

In addition, there are pressing issues such as the succession of the group meal supply of the 'Pan-LG Family' owned by Our Home and the opposition of Wellive, which has been in charge of Hanwha Ocean's group meal supply.

Our Home's LG Group is estimated to have about 110 locations, including around 80 LG Group locations, 20 LS Group locations, 10 GS locations, and 5 LX Group locations. Our Home is also unable to operate the LG Science Park catering facility located in Magok-dong, Seoul.

Wellive continued to operate its catering business even after Daewoo Shipbuilding & Marine Engineering changed to Hanwha Ocean, but Hanwha Ocean recently split its catering contractors into two companies: Wellive and Pulmuone. Due to strong opposition from union members of the Metal Workers’ Union’s Wellive branch, Pulmuone’s restaurant operation is being postponed day after day.

It will be interesting to see how Vice President Kim Dong-sun will overcome these difficulties and run the business smoothly.

In relation to this, Hanwha Group explained, "We are reviewing various business sectors, but nothing has been specifically confirmed."