On the 16th, Shinsegae and Naver signed a stake exchange contract worth 250 billion won and established an anti-coupang allied front.
Naver and E-Mart held an emergency board meeting each day and decided on a plan for alliance and cooperation through stock exchange. Shinsegae Group decided to exchange 150 billion won worth of E-Mart treasury stock and Shinsegae International’s 100 billion won worth of Shinsegae International stock for Naver stock. When the stock exchange is completed, Naver will become the 3rd largest shareholder (2.96%) of E-Mart following Shinsegae Vice Chairman Jeong Yong-jin and Shinsegae Chairman Lee Myung-hee. The two companies are expected to engage in a wide range of alliance businesses, such as online and offline distribution and sales, distribution hubs, and last mile delivery.
The decision to alliance between Naver and Shinsegae can be interpreted as predicting a fierce logistics war between Coupang vs. anti-Coupang camps, as Coupang came at the point of making domestic investments through listing on the US stock market. Naver’s shopping transaction last year amounted to 30 trillion won (based on Naver Pay payment).
E-Mart’s total sales last year was 15,535.4 billion won. The sum of SSG.com (3,923.6 billion won) exceeds 19 trillion won. The simple combination of Naver and E-Mart surpasses Coupang (about 22 trillion won).
Shinsegae also participated in the preliminary bidding for the sale of eBay Korea (20 trillion won based on transaction amount) on this day. An official from the investment banking (IB) industry said, “Shinsegae Group is considering funding plans with SSG.com’s second largest shareholder and global private equity fund Affinity Equity Partners.” .
In addition to Shinsegae, more than 10 companies including Kakao, SK Telecom, Lotte Shopping, and MBK Partners, as well as large private equity funds, are known to have participated in the preliminary bidding for the sale of eBay Korea. Coupang shares closed at $50.45, up 4.09% on the 15th (local time). Coupang’s market capitalization is 97,8554 billion won.
“Let’s face the bigger enemy”… Distribution’Yesterday’s enemy’ becomes’Today’s comrade’
Article 161.Online Distribution’War of Hegemony’
Shinsegae Vice Chairman Jeong Yong-jin is said to have been shocked by two things around the beginning of this year. The first is that platform operators such as Naver and Kakao have reduced the power of jumping into shopping. The novel coronavirus infection (Corona 19) has accelerated’click consumption’ and threatened the logistics craze that E-Mart has enjoyed for nearly 30 years since 1993.
The impact of the’star species’ called Coupang was even greater. After hearing about the corporate value of 40 trillion won, the market cap exceeded 100 trillion won immediately after listing on the US stock market. It is 20 times that of E-Mart (about 5 trillion won). Vice-Chairman Chung was staying in the United States on the 12th of last month when Coupang announced the news of listing on the New York Stock Exchange (NYSE).
Industry insiders analyzed that Shinsegae’s decision to join hands with Naver can be compared to’Owol-dongju’ and’national cooperation’. It is an interpretation that he held hands with an enemy next to him to counter the larger enemy (Coupang). Beyond the domestic online shopping market worth 161 trillion won, the war has begun over who will take control of distribution in the future.
An unexpected alliance sung by’Coupang Shock’
The partnership between the two companies is symbolic in itself. Shinsegae Group is the number one offline distribution company in Korea. E-Mart, which has 150 stores nationwide, recorded 15,5354 billion won in total sales last year. The sum of SSG.com (3,923.6 billion won) exceeds 19 trillion won. Shinsegae Department Store and Shinsegae International are leading companies in the domestic’luxury’ industry.
Naver has emerged as the No. 1 company in the online shopping field by taking advantage of its position as the No. 1 search platform. Based on the amount of Naver Pay, Naver Shopping is worth 30 trillion won (the smart store transaction is estimated at about 15 trillion won). The simple sum of the transactions between Naver and E-Mart exceeds Coupang (about 22 trillion won).
Vice Chairman Jeong Yong-jin and Naver founder Lee Hae-jin, chief investment officer (CIO), are known to have frequent exchanges with their homes close to Pangyo. The two businessmen who sympathized with the’anti-coupang solidarity’ started a formal dialogue for strategic alliance at Naver headquarters in Pangyo with E-Mart CEO Kang Hee-seok and Naver CEO Han Sung-sook, respectively. The exchange of shares is the result of negotiations over about two months.
The big picture of Jung Yong-jin becomes concrete
An official from Naver explained that “we will cooperate with Shinsegae in terms of fresh food logistics and product branding” on the synergy effect with Shinsegae. Naver conducted a stock exchange worth 300 billion won with CJ Logistics in October last year to compensate for its weakness in the logistics sector. In preparation for Coupang’s unstoppable attack, the logistics field, which is considered the weakest point in the shopping field, is a strategy to rush to complement the pan-Samsung family of Shinsegae and CJ.
Although the two companies decided to stand under the same flag, there are many voices of doubt as to whether the chemical bonding effect can be achieved. Experts believe that logistics cooperation alone is not realistic. SSG.com’s online order throughput is only 79,000 per day. Compared to Coupang (about 3.3 million cases per day), it is the level of’new blood’.
There may be a result of E-Mart group entering Naver’s’umbrella’. With its strengths in the fresh food and’luxury’ fields, SSG.com has been working hard to build its own shopping platform. It is for this reason that E-Mart did not enter the’Naver Shopping Mall’ unlike other retailers.
An expert in the investment banking (IB) industry said, “The joint venture with Naver at its peak has a big side to grow in size to combat Coupang.” It is a strategy to increase the ransom as much as possible when listed on SSG.com through partnership with Naver and M&A (merger and acquisition).” It means that SSG.com can be listed in the US like Coupang. On the 15th (local time), Coupang’s stock price ended at $50.45, up 4.09% from the previous day. The market capitalization amounted to 97,8554 billion won.
Reporter Park Donghui/Kim Juwan [email protected]