This article was published on Signal, a capital markets compass, at 4:38 p.m. on April 30, 2025.
As Aekyung Industrial (018250), a KOSPI-listed company, pushes ahead with a sale, projections are emerging that the company is likely to be delisted regardless of who acquires it. Private equity funds (PEFs) generally invest in unlisted companies as a matter of principle for efficient management. In addition, because the sale price Aekyung Group currently hopes for is far higher than its market capitalization based on the share price, even an ordinary company would be unable to avoid an accounting loss if it kept the firm listed.
According to the investment banking (IB) industry Wednesday, Aekyung Group has selected Samjong KPMG as the sale adviser and is receiving non-binding letters of intent from major acquisition candidates for the sale of group affiliates Aekyung Industrial and Joongbu CC. The sale target is a 63.38% stake in Aekyung Industrial held by AK Holdings, Aekyung Asset Management and others. Aekyung Group wants a sale price of 600 billion won for Aekyung Industrial and 250 billion won for Joongbu CC.
However, Aekyung Industrial's share price fell 3.82% from the previous day to 13,610 won that day, and the price based on the day's closing figure of 356.4 billion won came to only 231.5 billion won.
Acquiring Aekyung Industrial, a listed company, at a price higher than its share price can be recorded as a goodwill impairment loss, an accounting loss. This is particularly difficult for PEFs and the institutional investors who commit capital to them to accept.
"For a listed company, anything above the share price is immediately recognized as a goodwill impairment loss," an industry official said. "Although it is not an actual loss but a loss on the accounting books, it is a transaction that pension funds and mutual aid associations, which are audited by multiple external parties, cannot help but be reluctant about." By comparison, no matter how much is paid to acquire an unlisted company, it is difficult for that to be recorded as a goodwill impairment loss until a new corporate value is established through another transaction later.
If Aekyung Industrial is acquired at a price higher than its share price, a goodwill impairment loss is likely to be applied from the second fiscal year after the acquisition. For this reason, the industry projects that Aekyung Industrial is likely to be delisted in the first year of the acquisition.
"It is a transaction that can only be pursued if the buyer has the funds and confidence to delist the company quickly while roughly meeting the price Aekyung Group demands," an industry official said.
For Joongbu CC as well, Aekyung Group expects more than 10 billion won per hole, corresponding to the highest price in the industry. Joongbu CC is located in Gwangju, Gyeonggi Province, giving it a favorable location, and as a high-end membership golf course it has scarcity value, which is why companies seeking to use it for business activities are said to be interested.
However, as the golf industry declines, the market currently assesses 8 billion won per hole as appropriate. To acquire it at 10 billion won, its value must be raised by more than that difference, and one method being discussed is to increase revenue by expanding Joongbu CC, currently operated on a two-shift system, to a three-shift system.
Adding another nine holes could raise the value further, but it is pointed out that obtaining additional development permits from the Ministry of Environment would be difficult due to the golf course's location, which is crossed by the Sinchon Stream, a tributary of the first-grade water Gonjiam Stream.
"Curo Group's Curo CC raised its golf course value through three-shift operation and course expansion, turned a profit and was sold at a price close to 10 billion won per hole," an industry official said. "Because Joongbu CC is difficult to expand, there will be limits to raising its value."
