SK Stoa Sale Nears Close as Union Opposition Remains Final Hurdle

The sale of SK Stoa, a T-commerce (TV-based e-commerce) company, is entering the final stretch. SK Telecom (017670.KS), which owns 100% of SK Stoa, recently approved the sale at a board meeting, while preferred bidder Rapo Labs has nearly completed preparations to pay the acquisition price. The final variable is opposition from SK Stoa's labor union, which opposes the sale. Some industry observers suggest SK Group may pay consolation money to employees, similar to other major conglomerate carve-out deals.

According to investment banking sources on December 4, SK Telecom and Rapo Labs have reached final agreement on the terms of the SK Stoa sale and acquisition, and are set to sign the contract. SK Telecom held a board meeting on November 26 to approve the SK Stoa sale, while Rapo Labs has increased its committed investment from venture capital firms to approximately 60 billion won ($44 million). The agreed acquisition price is known to be around 110 billion won. SK Stoa is the leading company in the T-commerce industry, while Rapo Labs operates Queenit, a fashion e-commerce platform targeting women in their 40s and 50s.

Rapo Labs is reportedly planning to raise 90 billion won for the acquisition. Currently, the company has received investment commitment letters totaling 59 billion won from VCs, with major firms including Altos Ventures participating in the funding. The VC investment is being pursued through a third-party allotment capital increase. As this involves issuing new shares to increase capital, it differs from a leveraged buyout (LBO) that uses debt to acquire a company. However, Rapo Labs has left open the possibility of raising debt to secure investment and operating funds after acquiring SK Stoa. Excluding the planned VC investment, Rapo Labs currently has approximately 65 billion won in cash, cash equivalents, and short-term financial instruments available.

As both sides approach deal closure, internal opposition centered on SK Stoa's labor union remains a hurdle to overcome. The union has raised concerns about a startup that is currently in deficit acquiring SK Stoa. Queenit, operated by Rapo Labs, has approximately 2.7 million monthly active users and is popular among consumers in their 40s and 50s, but has yet to achieve annual profitability as reaching the break-even point has been delayed. A Rapo Labs official responded, "This reflects the nature of the e-commerce business, which takes time to reach BEP," adding, "Profitability improvement is underway, with operating cash flow turning positive since last year."

Some suggest consolation payments may be made to SK Stoa union members. In recent major conglomerate carve-out deals, cases of paying consolation money to employees whose affiliation changes through M&A have been increasing. Hyundai Wia reportedly paid approximately 200 million won per person in consolation money to about 100 employees whose affiliation changed when it sold its machine tool division to a consortium of Lilson Private Equity and SMEC in July. An investment banking industry official said, "Discussions appear to be underway on paying consolation money beyond employment guarantees," adding, "However, from the company's perspective of needing to pursue more carve-out deals in the future, paying large-scale consolation money would be burdensome."