MBK Partners postponed the final bidding for Nexflex, a smartphone flexible copper clad laminate (FCCL) manufacturer, originally scheduled for the 10th. Deutsche Bank, the deal advisor, notified bidders last week of the postponement due to MBK Partners' internal situation, with the revised schedule yet to be determined. The postponement is attributed to the aftermath of the Seoul Rehabilitation Court's decision on the 3rd to terminate the rehabilitation procedure for Homeplus, a major investment company of MBK Partners, after determining that Homeplus failed to secure operating funds necessary for rehabilitation. MBK Partners, as Homeplus's largest shareholder, is currently focused on legal responses and securing operating funds following the rehabilitation procedure termination. The Nexflex sale is part of MBK Partners Fund 5's exit strategy, with preliminary bidding having selected 3 to 4 qualified candidates in May.
Deutsche Bank Postpones Final Bidding Schedule
Deutsche Bank notified bidders last week that the final bidding originally scheduled for the 10th has been postponed. The revised schedule has not yet been determined. Some bidders are scheduled to conduct additional on-site due diligence starting next week. Deutsche Bank had selected 3 to 4 qualified candidates from preliminary bidding participants and notified them of the results in May. The final bidding was scheduled approximately two months later, but the postponement has delayed the submission of final acquisition proposals beyond the original plan.
Homeplus Rehabilitation Termination Impacts Sale Timeline
An investment banking industry official stated that they received notification from the deal advisor on the 2nd that the Nexflex transaction schedule was delayed by approximately one month due to MBK Partners' internal situation, with bidders understanding the delay as resulting from the Homeplus situation. On the 3rd, the Seoul Rehabilitation Court decided to terminate the corporate rehabilitation procedure for Homeplus after determining that the company failed to secure operating funds necessary for rehabilitation. Homeplus can file an immediate appeal within two weeks, but if the rehabilitation procedure termination is confirmed due to failure to raise funds, the case may proceed to bankruptcy proceedings. MBK Partners is currently concentrating on follow-up responses including legal action and securing operating funds following the rehabilitation procedure termination decision, effectively slowing down the simultaneous Nexflex sale process.
Affirma Capital and Busan Equity Partners Among Bidding Candidates
Current major acquisition candidates include the Affirma Capital-Stick Investment consortium, Busan Equity Partners, and Taekwang Group participating with financial investors. Affirma Capital and Stick Investment originally formed a consortium to participate in preliminary bidding, but the combination between the two parties is not in a binding form. The structure leaves room for either party to partner with other bidders if one side withdraws from the acquisition race during the sale process. Some major bidders have reportedly withdrawn, and the possibility of additional key candidate departures has been mentioned, weakening the competitive structure of the acquisition race.
Nexflex Valuation Exceeds 800 Billion Won Target
Nexflex's EBITDA last year was approximately 85.1 billion won, nearly double the approximately 46.3 billion won from the previous year. EBITDA is an indicator measuring a company's cash generation capability through operating activities. Based on this figure and MBK Partners' desired sale price, the calculated EV/EBITDA multiple for Nexflex's enterprise value is approximately 9 to 10 times. However, with major bidders withdrawing consecutively and the final bidding postponed, whether the transaction will close at MBK Partners' desired price has become uncertain. Nexflex produces FCCL, a core raw material for flexible printed circuit boards (FPCB) used in smartphones. The company started as SK Innovation's FCCL business unit and was acquired by private equity firm Skylake Equity Partners in 2018. It currently has major customers among suppliers to global smartphone manufacturers including Apple and Samsung Electronics. MBK Partners acquired 100% of Nexflex shares from Skylake Equity Partners for approximately 530 billion won in 2023. With performance having improved significantly since then, the selling side reportedly expects an enterprise value of at least 800 billion won or more in this transaction. An investment banking industry official stated that while some candidates continue their review, the transaction has reached a stalemate due to variables in the candidate pool and the postponement of final bidding, with the key issue being whether remaining candidates can meet the selling side's price expectations.
FAQ
Why did MBK Partners postpone the Nexflex final bidding?
MBK Partners postponed the final bidding due to internal situation related to the Seoul Rehabilitation Court's decision on the 3rd to terminate the rehabilitation procedure for Homeplus, a major investment company of MBK Partners. The company is currently focused on legal responses and securing operating funds for Homeplus.
What is the expected valuation for Nexflex?
The selling side reportedly expects an enterprise value of at least 800 billion won or more for Nexflex. Based on the company's EBITDA of approximately 85.1 billion won last year and MBK Partners' desired sale price, the calculated EV/EBITDA multiple is approximately 9 to 10 times. MBK Partners acquired 100% of Nexflex shares for approximately 530 billion won in 2023.
Who are the main bidding candidates for Nexflex?
Current major acquisition candidates include the Affirma Capital-Stick Investment consortium, Busan Equity Partners, and Taekwang Group participating with financial investors. Deutsche Bank selected 3 to 4 qualified candidates from preliminary bidding participants in May.
