PEFs eyeing Osstem Implant

The headquarters of Osstem Implant in Seoul / Courtesy of Osstem Implant

By Anna J. Park

Despite the ongoing risks surrounding Osstem Implant stemming from an employee's embezzlement of some 220 billion won ($187 million), private equity firms (PEFs) are setting their eyes on the firm in the event it opens up to a possible acquisition.

According to the investment banking industry this week, a few PEFs are said to have contacted the dental implant manufacturer to discuss the possibility of putting the firm's management rights up for sale.

As the goal of most PEFs is to acquire a quality company at a low price and resell it for more, Osstem Implant is drawing PEFs' attention for its solid fundamentals. As it is now expected that more than half ― or 141 billion won ― out of the embezzled 221 billion won will be retrieved, PEFs see Osstem Implant's position as the top dental implant manufacturer in the country will not be significantly impacted.

Founded in 1997, Osstem Implant occupies about 50 percent of the local market share, and the firm also enjoys one of the top-tier positions with its global market share.

Even when all of the embezzled amount is reflected in the financial statement, it is expected that the firm will post a net profit of 31.9 billion won for last year, proving the soundness of its fundamentals. The firm posted a revenue of 822 billion won for last year, while its revenue for this year is estimated at around 1 trillion won.

"When a company with sound fundamentals and profits has been involved in an incident, PEFs tend to approach the company for a possible acquisition of its management rights. Except for the risk of delisting, Osstem Implant is obviously an attractive company in the M&A market," a market insider pointed out.

The largest shareholder of the company is Chairman Choi Kyoo-ok, who holds 20.61 percent of company shares. The police's embezzlement investigation has been expanded to incumbent management executives, including Chairman Choi. Thus, it is expected that M&A discussions, if there are any, will enter into full swing once the current investigation is completed.

Meanwhile, Osstem Implant announced Thursday that such M&A rumors are not true. In an official statement, the dental implant company said that it never had discussions regarding the sale of its management rights.

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