TOO EXPENSIVEThe medical skin-care business in general reports about 100 billion won and 25 billion won in annual sales and earnings before interest, taxes, depreciation, and amortization (EBITDA), respectively.“Paying the price at 20x EBITDA for the business without manufacturing facilities is risky,” said an official in the IB industry.“A strategic investor with its own manufacturing facilities and a PE firm with a cosmetics portfolio considered bidding for it, but the price gap between the seller and buyer was too big to narrow.” The seller’s secretive offer has also made the potential buyers turn their backs on the deal, said sources.
South Korean chemical giant LG Chem Ltd.'s offer for sale of its cosmetics filler business, tagged with an asking price of more than 500 billion won ($352 million), has failed to capture much interest from highly anticipated buyers.
Considering that HSBC has no permanent local staff in its M&A team in the Seoul office, LG Chem also might have mulled Chinese investors as potential buyers of its medical skin-care business when it picked HSBC as the lead sale advisor in February, said sources.
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