MBK Partners, one of South Korea’s leading private equity firms, is reportedly in talks to acquire a major stake in the country’s leading online education company MegaStudyEdu for about 650 billion won (US$495 million).
According to sources, MBK Partners plans to acquire about a 35 percent stake in the education company, including a 13.5 percent stake owned by Founder and Chairman Son Joo-eun, 13.5 percent by CEO Son Sung-eun, and 6 percent held by MegaStudyEdu Co.
MegaStudyEdu provides education services for all age groups – primary, middle, and high school students – and for applicants to Korea’s public service exams. Since its split from MegaStudy in 2015, the education company has grown into a leading tutoring service provider in Korea by expanding its business scope to all-age groups with online and offline platforms such as MegaStudy for college entrance exams, elihigh for elementary school students, Mbest for middle school students, and educational services for adults.
MegaStudy was founded in 2000 by Son Joo-eun, a renowned lecturer of social studies subjects for Korea’s annual college entrance exam, and Cho Jin-man, also a prominent lecturer. The firm grew rapidly and became the first private education company to go public on Korea’s secondary Kosdaq bours in 2004.
Market sources estimate the transaction to be valued at around 650 billion won, which is roughly equivalent to 150,000 won per share, twice higher than the current stock price of MegaStudyEdu. MegaStudyEdu’s market capitalization recently crossed 1 trillion won from 332.1 billion won in August 2019.
Education is one of the M&A sectors of interest for MBK Partners. The private equity firm joined the race to buy language learning business Wall Street English from Pearson in 2017 and bought China’s Wendu Education Technology Group via its Hong Kong affiliate in 2019.
If clinched, the deal will make MBK Partners the largest shareholder of MegaStudyEdu. Key shareholders of the company include Chairman Son and affiliate persons, Fidelity Management & Research Company, and Korea’s National Pension Service (NPS), with the latter two holding 6.7 percent and 5.2 percent stakes respectively as of end-March.
According to reports, both parties will complete due diligence by August and sign a contract for the deal as early as the third quarter of this year.