[THE INVESTOR] A Seoul court on Nov. 23 denied a petition by Woongjin that MBK Partners violated its buyback rights when the private equity firm sold some stake in Coway, the nation’s No. 1 water purifier rental business operator, without the former owner's knowledge.
MBK in 2012 acquired a 31 percent stake in Coway from then cash-strapped Woongjin for 1.2 trillion won (US$1.10 billion). Coway was a cash-cow business for Woongjin but the firm had to sell it on condition that it retained primary rights to buy back control when it is put up for sale.
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After several failed attempts to find a new buyer for Coway whose value has almost doubled now, MBK in May this year sold off a 4.68 percent stake to an institutional investor in a block deal. Woongjin objected to the stake sale, claiming MBK should have given it notice in advance and demanded 26 billion won as compensation.
The court, however, ruled in favor of MBK, saying the stake sale was not related to a specific buyer or the management rights that are obliged to be notified before 30 days under the deal conditions between the two firms.
MBK and Woongjin were represented by the nation's top two law firms -- Kim & Chang and Taepyeongyang, respectively.
Woongjin has not yet decided on appealing against the ruling.
"A block deal is widely considered a stake sale to a specific party because the deal usually happens when two parties agree to trade stake at a mutually agreed price. The Kim & Chang lawyers seemed to be better prepared,” said an industry source on condition of anonymity.
By Lee Ji-yoon (firstname.lastname@example.org)