Burger King, Mom’s Touch stake sales in South Korea face uncertainty

Burger King and Mom’s Touch are two of the leading burger restaurants in South Korea, but now their sales are reportedly in limbo. This is because uncertainties over sales have been spreading throughout the local franchises of other global fast-food brands, including McDonald’s and KFC.

These restaurants are trying to find new owners for their franchises, but there has been no success so far. The current owners are struggling to find buyers, so these brands are facing growing skepticism. Burger King, McDonald’s, KFC, and Mom’s Touch as well are having difficulties in the market today because of the declining worsening conditions in the financial and fast-food businesses.

The companies and business experts said that one of the reasons for the declining sales is the local customers’ growing preference for healthier foods.

In any case, these brands have been up for sale since early this year, and since there are still no interested parties, experts said that potential buyers may become very reluctant to offer high prices for the acquisition. Moreover, with the situation, market insiders are seeing Burger King and others as overvalued right now.

The Korea Times reported that as the investors remained unenthusiastic to make a higher price offer, Affinity Equity Partners, the current owner of Burger King Korea and operations in Japan, recently made the decision to postpone the sale of its stakes in BK in Japan and S. Korea. The Asian private equity firm is reportedly delaying the sale until the second half of 2023.

Affinity Equity Partners acquired Burger King Korea in 2016 for KRW210 billion or about $188.44 million at that time. The PEF company hired Goldman Sachs to be the underwriter for the sale deal.

Meanwhile, for the sale of Mom’s Touch operations, KL & Partners reportedly changed its underwriter for the sale and hired Deutsche Securities, leaving BofA Securities. The company made this move to sell the chicken burger franchise for KRW1 trillion.

"PEFs will continue trying to sell their fast food franchises for higher prices," a top official of a local PEF firm commented regarding the sale of restaurant brands. "Considering their earnings, however, most franchises seem overvalued."

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