Sweden’s EQT Partners, one of Europe’s largest private equity firms, has agreed to acquire a controlling stake in Douzone Bizon Co., South Korea’s leading homegrown enterprise software firm and the country’s No. 2 player in the enterprise resource planning (ERP) market, for 1.32 trillion won ($905 million).
The deal marks one of the largest private equity takeovers in Korea’s information technology services sector this year.
Douzone said in a regulatory filing on Friday that Kim Yong-woo, chairman and founder of the Kospi-listed company, signed an agreement to sell his 22.29% stake, or 6.77 million shares, to EQT’s special purpose vehicle, Doronicum, at 120,000 won per share, representing a 28.5% premium to Thursday’s closing price of 93,400 won.
Douzone’s second-largest shareholder, Shinhan Financial Group, will also sell its common and preferred shares to EQT at the same price.
The European buyout group, backed by Sweden’s Wallenberg family, will acquire a total 34.85% stake, including Shinhan’s holdings through affiliates, for 1.32 trillion won, securing management control.
KOREA’S LARGEST HOMEGROWN ERP PLATFORM
In June, EQT Partners was among a shortlist of five Korean and global buyout groups that bid for the stake.
Douzone Bizon operates Korea’s largest locally developed ERP platform, serving as a critical digital backbone for smaller Korean firms.
With a less than 20% domestic ERP market share, it trails only German enterprise software giant SAP in Korea.
The Korean ERP developer and cloud service provider generates about 400 billion won in annual revenue with an operating profit margin in the 20% range, making it a highly profitable mid-market target.
Founded in 1991, Duozone Bizon has also built a broader software and information technology services ecosystem through affiliates such as Kicom, an electronic fax service provider; Douzone ENH, a corporate training and English teaching unit; and Douzone B&F, an information services provider.
EQT, ACTIVE PLAYER IN KOREA’S BUYOUT SECTOR
Stockholm-based EQT has been active in Korea, acquiring a controlling stake in Remember & Company, the operator of a fast-growing career networking platform, in August for about 500 billion won.
EQT bought a 47% stake in Remember, Korea’s answer to LinkedIn, from Remember’s largest shareholder, Ark & Partners, a Seoul-based private equity firm.
More recently, EQT has put Acuon Capital Corp. and Acuon Savings Bank Co., which it purchased six years ago, up for sale, sources said on Thursday.
The sale of the two Acuon firms could fetch some 1 trillion won, they said.
POSSIBLE INTEGRATION OF DUOZONE WITH REMEMBER
Negotiations between EQT and Douzone’s shareholders dragged on for months due to price differences before they reached an agreement on the 120,000 won per share valuation.
Stock investors anticipated a follow-up tender offer for minority shareholders, but EQT didn’t reveal plans for a public tender, triggering a sell-off in Douzone’s shares, which fell 12% to 82,000 won in late Friday trading.
EQT is expected to pursue a long-term operational improvement for at least five years following the takeover.
Analysts said the firm could seek to integrate Douzone’s ERP system with Remember’s human resources platform, leveraging both companies’ client networks and data capabilities to expand into enterprise cloud services.
