©Reuters. Big 2.4 trillion deal… MBK embraces intraoral scanner company Medit
Minho Jang, CEO of Medit. Photo = Hankyung DB
▶Market Insight December 29, 9:21
MBK Partners, Korea’s largest private equity fund (PEF) manager, signed a master agreement on the 29th to acquire Medit, an oral dental scanner company, for approximately KRW 2.45 trillion. According to the investment banking (IB) sector, MBK has signed a share purchase agreement (SPA) to acquire a 99.5% stake in the company from PEF management company Unison Capital, which is Medit’s largest shareholder , for 2.45 trillion won.
The company’s founder, Korea University professor Min-ho Jang and a connected special person will remain co-investors with MBK Partners. They plan to sell approximately 35% of their stake to MBK Partners and reinvest most of the proceeds from the sale. This is because the growth potential of the global digital dental market and Medit is high. When the transaction is completed, MBK Partners will secure 70% of the shares and Professor Jang and a related person will retain the remaining 30%.
Medit is a company with 3D dental intraoral scanner technology. It was founded in 2000 by Professor Chang, a graduate of the Massachusetts Institute of Technology (MIT). At the end of 2019, Unison Capital acquired a 50% stake + 1 stake for approximately 320 billion won. Since then, Medit has grown rapidly and secured the world’s third largest market share in the intraoral scanner market.
This year, sales and EBITDA are expected to register KRW 270 billion and KRW 150 billion, respectively. It increased significantly from last year’s sales (190.6 billion won) and EBITDA (103.9 billion won). Medit Pan Unison Capital, profit 6 times in 3 years of “jackpot”
MBK, main contract to acquire Medit… The acquisition of Medit, considered a “big deal” in the second half of this year, has been fiercely contested by global private equity funds (PEFs) such as Carlyle Group in the US, Kohlberg Kravis Roberts (KKR) and CVC Capital in Europe In October, the GS-Carlyle consortium was selected as the preferred bidder to acquire Medit, but when negotiations fell through due to a breakdown, MBK Partners, which did a “surprise appearance”, she became the eventual winner.
MBK Partners closed its first trillion dollar transaction at the end of this year. This year, Kakao Mobility worth 10 trillion won and Megastudy Education worth 2 trillion won have been prosecuted, but failed each time. About 1 trillion won will be invested through the 5th blind fund, established in 2020 for the acquisition of Medit on a scale of $6.5 billion.
MBK Partners’ acquisition of Medit is due to the growth potential of the digital intraoral scanner market and Medit’s technological prowess. Medit is one of the few leading companies in the world in the digitization of the dental office. If you use Medit’s three-dimensional (3D) intraoral scanner while making a tooth model and denture, you can shape the tooth structure in tens of seconds without using rubber clay or plaster molds.
The digital intraoral scanner market is considered a blue ocean. The market penetration rate of 3.9% in 2018 is still only 10-20%. In developed markets like the US and Europe, the share is less than 30%. It is expected to rise to 30-40% by 2027.
With the sale of Medit, Unison Capital concluded a new historic deal after the sale of Gongcha, a franchised milk tea brand in 2019. Medit is the first investment of the 2nd blind fund. Through this sale, Unison Capital is expected to achieve a return on investment (MOIC) of approximately 6.5x and an internal rate of return (IRR) of 80%.
It is a level that exceeds the trend of the sell-off. Unison Capital acquired Gongcha in 2014, built it into a global brand, and sold it to TA Associates, a US PEF, for 350 billion won in 2019. At the time, it registered about 5.6 times the MOIC and 30 % IRR. This transaction was considered the first case in which a domestic private equity fund acquired an overseas franchise and sold it after increasing its business value. Gong Cha’s management story was selected as a case study at Harvard Business School (HBS) in the United States.
Reporter Kim Chae-yeon [email protected]
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