An outlet of second-hand car trading platform K Car / Courtesy of K Car
KG Group will take over Korea’s largest secondhand car trading platform K Car, as it seeks to establish a mobility ecosystem spanning automobile manufacturing, retailing and IT platform.
According to regulatory filings Wednesday, KG Steel, a steelmaking unit of KG Group, signed a contract a day earlier to acquire a 72.2 percent stake in K Car from private equity Hahn & Co. Auto Holdings at 550 billion won ($364.7 million).
K Car is Korea’s largest secondhand car trading platform, operating 48 directly managed outlets nationwide. Its sales reached 2.5 trillion won last year.
Through the acquisition, KG Group has secured an integrated mobility business ecosystem covering KG Mobility’s automobile manufacturing, K Car’s car distribution and KG ICT’s IT platform operation.
KG Group plans to integrate KG Mobility’s vehicle production capabilities and global sales network with K Car’s online and offline distribution platform to provide end-to-end services spanning the entire process from purchase to distribution and after-sales service.
The group said the acquisition is a strategic decision to better respond to the rapidly changing automotive industry landscape. As the industry shifts from a manufacturing-centered model to one driven by distribution, services and IT platforms, the group aims to take a leading position in the market through proactive investment.
For KG Steel, the acquisition comes as an opportunity to leverage K Car’s stable cash-generating capabilities to offset the cyclical uncertainties of the steel industry and diversify its business portfolio.
“By organically linking K Car’s capabilities with the group’s mobility business, KG Group will strengthen its mid- to long-term growth foundation and contribute to securing a stable earnings structure,” a KG Group official said.
Further details of the deal will be finalized following the completion of all remaining procedures. The transaction is expected to close by the end of June.
Along with KG Group, Cactus Private Equity will acquire K Car Capital from Hahn & Co. for 200 billion won. KG Steel and Cactus have formed a consortium for the deal.