Hong Kong-based private equity firm PAG signed an agreement on August 27 to sell its South Korean toy maker Young Toys to a consortium led by local education service provider MiraeN Co Ltd for 148 billion won ($125 million), industry sources said.
PAG acquired a 95.6% stake in Young Toys from Headland Capital Partners for 220 billion won in 2015. It launched the Beyblade Burst toy line the following year in partnership with Japanese entertainment company Tomy. The product became a big hit in the domestic toy market, which led to a significant increase in the company’s profits in 2017 and 2018.
PAG first attempted to exit its involvement with BDA Partners as deal manager in 2018. It wanted 250 billion won to 300 billion won for the company but failed to find a buyer as the toy industry entered a downturn.
The firm entered into negotiations with MiraeN in October 2019. With Young Toys’ financial performance weakening, PAG lowered the target price to about 200 billion won. The Covid-19 pandemic was another blow to the company, and the deal was eventually signed at 148 billion won.
PAG has roughly earned what it paid for the company five years ago, thanks to high dividend payments. It received some 67 billion won in dividends from Young Toys for three years from 2016 to 2018.
PAG will likely continue to look for buyout opportunities in South Korea, although its previous attempts to acquire South Korean companies, such as Hwasung Cosmetics, waste management company Koentec and weight loss company Juvis, were not successful.
PAG’s strong network in China and pile of cash will help it further increase its presence in the country, industry watchers said. (Reporting by Se-hun Jo)