Carlyle Among Bidders for Buy the Way

TOKYO (Reuters) – Japanese retailer Ministop (9946.T), South Korea’s Lotte Group and U.S. private equity firm Carlyle Group will make final bids for South Korean retailer Buy The Way on Friday, two sources said.

Unitas Capital, the private equity firm auctioning off Buy The Way, is looking to sell the convenience store chain for no less than 250 billion Korean won ($223 million) and aims to close the deal by the end of the month, said the sources, who were not authorised to speak publicly.

Asia-focused Unitas received nine bids for Buy the Way, Reuters reported in November. Unitas acquired South Korea’s fourth-largest convenience store chain in July 2006 for about $200 million in a leveraged buyout.

South Korea’s convenience store market has been growing rapidly, expanding 17 percent to 6.5 trillion won in 2008. With 1,400 outlets, Buy The Way accounts for about 10 percent of South Korea’s convenience stores and holds 11 percent of industry-wide sales.

Saddled with a saturated market and an ageing population at home, Japanese retailers have been keen to expand in fast-growing Asian economies.

FamilyMart (8028.T), Japan’s third-largest convenience store, is the No.1 player in the South Korean convenience store market, with about 4,400 outlets and a third of industry-wide sales.

Seven-Eleven, which is run by Lotte under a licence agreement with Seven & I Holdings (3382.T), has 2,000 outlets and a 16 percent market share.

Ministop operates 1,100 outlets and has a 9 percent share, ranking fifth in the country.

If Lotte gains Buy The Way’s 1,400 stores, Seven-Eleven, currently the country’s No.3 player in convenience stores after GS Retail of GS Group led by GS Holdings (078930.KS), would narrow the gap on the industry leader FamilyMart. If Ministop wins the deal, it would move up to third.

A spokesman at Aeon Co Ltd, which nearly holds a majority stake in Ministop, declined to comment

Lotte Group spokesman Lee Kang-hun said: “Yes, we have participated in bidding, but we are not actively pursuing it.”

“There are a number of potential M&A targets we are looking at, such as GS Retail’s discount store and department store businesses, but Buy The Way, frankly, is not on the top of our list,” he continued.

By Ritsuko Shimizu and Taro Fuse

(Writing by Yumiko Nishitani; Additional reporting by Jungyoun Park in Seoul; Editing by David Dolan and Joseph Radford)