MBK signs deal for Golfzon County, shareholder challenges sale — Korea Herald

In South Korea, investment firm MBK Partners has signed a deal to sell a controlling stake in golf club operator and booking platform Golfzon County to a consortium of The Sienna Group and Ciel Asset Management. The deal, which values Golfzon County at about 1.8 trillion won, or $1.35 billion, has sparked a dispute with the company’s second-largest shareholder, Golfzon Holdings, Korea Herald reports.

MBK, through a special-purpose company, owns 68.4% of Golfzon County, while Golfzon Holdings owns the remaining 31.6%. The sale of the controlling stake also involves the disposal of Golfzon Holdings’ stake.

Dispute over the right to sell

MBK said it has the right to invoke a drag-along provision in the event of an unsuccessful initial public offering. According to the company, this mechanism allows it to require Golfzon Holdings to sell its shares alongside MBK’s own stake.

MBK said Golfzon Holdings agreed to this condition when it signed an investment agreement in 2018. The company also said that Golfzon Holdings retaining management control depended on a successful IPO, and that under current market conditions, a listing was not a viable option.

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Golfzon Holdings, in turn, claims that MBK did not inform it about the details of the sale and purchase agreement or its intention to exercise the drag-along right. The holding company also said it agreed to the investment on the expectation of an IPO for Golfzon County.

Buyout offer and lease agreements

MBK said that before the official sale process began, it gave Golfzon Holdings a right of first offer to acquire Golfzon County, but the holding company did not submit a specific bid. According to MBK, this right did not oblige it to accept Golfzon Holdings’ offer, but allowed it to select the buyer with the most favorable terms.

Golfzon Holdings later offered to buy out MBK’s stake near the end of the bidding process. MBK called the offer substantially weaker in valuation and deal structure than the consortium’s proposal from The Sienna Group and Ciel Asset Management.

The parties also dispute the leases for four golf clubs — Anseong H and W, Seonun and Cheongtong. Golfzon Holdings said it transferred them to Golfzon County at below-market rates and without separate security deposits in order to support Golfzon County’s development and IPO plans. MBK insists that the lease agreements were lawfully concluded by mutual business agreement and formally approved in 2018.