Bain Capital to acquire bubble tea chain Gong cha as rival MBK grapples with regulatory pressure at home
Bain Capital announced it will acquire Gong cha as MBK faces regulatory pressure in South Korea.
Bain Capital won a battle to buy a global bubble tea chain as one of its top rivals remains under scrutiny from South Korean regulators.
Bain on Thursday announced it has agreed to acquire Gong cha from U.S.-based private equity firm TA Associates. MBK Partners, one of the largest private equity firms in Asia, was among the bidders for the chain and had been seeking a Korean private equity partner for a joint bid, according to communications seen by CNBC.
Under the proposed structure, MBK was to acquire Gong cha's Japan business, while its partner was to take over the company's South Korean operations, according to two people familiar with the matter.
But MBK's bid came as the private equity firm faced mounting regulatory scrutiny in South Korea following the collapse of its portfolio company Homeplus, once the country's second-largest supermarket chain by market share, according to a person familiar with the matter.
"Our Tokyo office evaluated Gong cha's business outside of South Korea, but our bid did not meet the valuation expectations of the seller," an MBK spokesperson said. "Any claims linking this outcome to our portfolio company or local matters in South Korea are entirely baseless."
The heightened regulatory pressure made it difficult for MBK to secure the deal on its own, given Gong cha's significant operations in South Korea, the person familiar with the matter said.
Homeplus secured 200 billion won ($141 million) in emergency funding after seeking court-led rehabilitation as it teetered on the brink of bankruptcy, following years of liquidity pressures that critics have partly attributed to MBK's leveraged buyout of the retailer.
Gong cha, which offers a wide range of tea and fruit-based beverages, operates more than 2,200 stores worldwide, including in the U.S. and Central America. Bain said it will continue expanding Gong cha in Japan and South Korea, where the brand has a strong footprint, while accelerating growth in the U.S., according to a press release.
