As the bidding war for Homeplus Express intensifies, the ability of acquisition candidates to complete the deal has emerged as a key variable. Under the rehabilitation sale structure, bidders must pay a performance deposit — typically around 10% of the sale price — at the main bid stage, and forfeit it if they abandon the acquisition.
The main bid for Homeplus Express will run through June 20, followed by the selection of a preferred bidder, according to retail industry sources on Thursday. The sale advisor has also opened main bid participation to companies that did not submit letters of intent, leaving room for additional candidates to emerge.
MGC Global, operator of Mega MGC Coffee, is known to have entered the bidding. With major retailers that were initially mentioned having dropped out, the field has shifted toward mid-sized and emerging players, industry observers said.
The rehabilitation sale structure poses the central challenge. Unlike conventional mergers and acquisitions, rehabilitation proceedings require bidders to finalize funding plans and investment structures at the main bid stage. Changing terms afterward is virtually impossible. Adjusting price or investment conditions after preferred bidder selection is extremely difficult, demanding confirmed financing capability from the outset.
The forfeiture of performance deposits adds further pressure. Even if due diligence reveals the business falls short of expectations, withdrawing midway means accepting the loss. This is why analysts say mere expressions of interest are not enough to carry an acquisition through to completion.
Market observers therefore suggest that forming a consortium with financial investors (FIs) is more viable than pursuing a solo acquisition. However, companies under rehabilitation often require significant additional capital injections post-acquisition. Follow-on costs such as store restructuring and workforce reorganization may also arise.
This structure is burdensome for financial investors as well. Investing on the premise of stable cash flows or a clear exit strategy is difficult. Analysts point to high earnings volatility and the strong likelihood of additional capital requirements as factors that make investment decisions particularly challenging.
MGC Global, one of the cited acquisition candidates, operates under the same ownership structure as food ingredient distributor Bora T&R, raising expectations for logistics and distribution synergies. However, the significant gap between a coffee franchise-centered business and corporate supermarket (SSM) operations remains a separate challenge — whether the acquirer can achieve stable management after the deal closes is yet to be proven.
"In rehabilitation sales, certainty of funding matters more than price," a rehabilitation industry official said. "The simultaneous burden of additional capital requirements and recovery uncertainty makes it difficult to secure investors in the first place."
