[Edaily Marketin, Reporter Song Seung-Hyeon ] Two domestic hamburger franchise businesses are seeking new owners through different approaches. Mom’s Touch has opted for a competitive bidding process, while BKR, the operator of Burger King, has chosen to negotiate directly with a prospective buyer without a bidding process. With both companies reportedly valued at around 1 trillion won, Mom’s Touch is highlighting its profitability and international performance, while BKR is emphasizing its scale and the expansion potential of Team Holton.

According to investment banking (IB) industry sources on the 23rd, KLN Partners and the lead underwriter, Citi Global Markets Securities, will conduct a preliminary bidding round for the sale of Mom’s Touch at the end of this month, followed by a formal bidding round in November. The process involves shortlisting qualified bidders during the preliminary round, conducting due diligence, and then receiving proposals containing prices and acquisition terms during the formal bidding round. It is reported that both domestic and international financial investors (FIs) and strategic investors (SIs) are showing balanced interest. The decision to opt for a competitive bidding process is believed to stem from the potential to create a scenario where multiple candidates compete on price.

BKR is pursuing the sale through a different approach. Affinity Equity Partners has devised a plan to expedite the sale without undergoing vendor due diligence (VDD). Recently, it selected Lazard Korea as a co-lead advisor and is accelerating efforts to identify potential buyers. Lazard is expected to place particular emphasis on marketing the deal to strategic investors (SI) in the overseas F&B and consumer goods sectors. The strategy is to select a buyer with whom synergies can be expected—rather than holding a public competition—and to negotiate while tailoring the acquisition rationale to that specific buyer.

Mom’s Touch’s strength lies in its profitability. Consolidated revenue increased by 65.8%, from 288.9 billion won in 2019—when KLN acquired the company—to 479 billion won last year. During the same period, operating profit rose by 373%, from 19 billion won to 89.7 billion won, and the operating profit margin stood at 18.7% last year. Consumer spending at approximately 1,490 stores nationwide totaled 1.0058 trillion won, surpassing the 1 trillion won mark for the first time since the company’s founding.

KLN appears to be leveraging Mom’s Touch’s potential for overseas expansion to drive up its valuation. In fact, starting with a master franchise agreement in Thailand, the company has expanded its store network by opening a pop-up store in Tokyo in 2023 and its first company-owned store in Japan in 2024. At its first store in Singapore, which opened on the 14th of last month, approximately 200 people were waiting in line even before the grand opening. Analysts note that the company has added a growth narrative of overseas expansion to its proven cash-generating capabilities in the domestic market.

BKR leads Mom’s Touch in terms of revenue growth. Revenue, which stood at 253.1 billion won at the time of acquisition, increased to 892.2 billion won last year. This marks a more than 3.5-fold increase in revenue over the past 10 years. Last year’s EBITDA reached 106 billion won, up 11.2% from the previous year, setting a new all-time high. EBITDA, which stood at around 59 billion won in both 2020 and 2022, surpassed 100 billion won for the first time last year.

Another key asset for BKR is Tim Hortons. Having first entered the Korean market at the end of 2023, Tim Hortons has opened 33 stores primarily in major commercial districts of the Seoul metropolitan area and is expanding into premium locations, such as its Seongsu flagship store. A roadmap to expand the number of domestic stores to around 150 by 2028 is also underway. The buyer can secure a growth story that enhances corporate value through Tim Hortons’ store expansion while stably maintaining acquisition financing with the cash generated by Burger King.

Both KLN and Affinity have already recovered a significant portion of their principal. Through three rounds of refinancing and capital restructuring, KLN distributed an amount exceeding twice the initial investment to its limited partners (LPs). Affinity, too, has recovered cash amounting to 70% of the acquisition price through three capital reductions. Since neither party has much reason to rush in price negotiations, both have the leeway to hold out for their desired price until the very end.

An industry insider predicted, “With the Mom’s Touch final bidding set for November and the BKR sale expected by the end of the year, the price of Mom’s Touch—which will be determined first—is likely to serve as the benchmark for the BKR negotiations.”