The bidding process for CJ Foodville’s bakery chain Tous Les Jours is speeding up after issues with franchisees were resolved, but preliminary offers are said to be lower than the company’s target valuation of 300 billion won ($258 million).
CJ Foodville, a South Korean dining-chain company, opened a virtual data room with preliminary due diligence information on Tous Les Jours and provided access to JKL Partners and Affirma Capital, industry sources said on Monday (October 5).
The private equity bidders were shortlisted for the final round of bidding almost three weeks earlier, but there was a delay due to a backlash from franchisees who filed for a court injunction in early September to stop CJ Foodville from selling the chain.
They withdrew their court application on September 28 after reaching an agreement with the company that a sale would be the best option for continued growth of the brand.
“Now that issues with franchisees have been resolved, the sale process is expected to speed up,” an industry insider said. “CJ Foodville decided to go ahead even though offers fell short of its expectations, which suggests it has a strong desire to sell the chain.”
CJ Foodville promised franchisees that a bidder would be selected on the basis of its growth plans for the brand. This could mean that non-price factors will be equally as important as the value of bids in choosing a new owner, and that the franchisees could influence the company’s decisions throughout the sale process, either directly or indirectly.
It might reduce the level of interest by private equity bidders in the chain, because they would not want possible intervention by franchisees to limit their future strategies for the chain.
“Potential buyers for Tous Les Jours may have to be worried about a possible situation where strong voices from franchisees force them to change their way of running the chain, even after one of them acquires it,” said another industry insider. (Reporting by Ik-hwan Choi)