Number One in Industry Store Count, Mom's Touch Voluntarily Delists... "Minimizing External Impact"

[Asia Economy Reporter Moon Hyewon] Domestic hamburger franchise Mom's Touch (1,352 stores as of the end of last year) has declared a voluntary delisting.

According to industry sources on the 21st, Korea F&B Holdings, the largest shareholder of Mom's Touch & Company, announced yesterday that it will conduct a tender offer for the purpose of delisting Mom's Touch.

The target for purchase is 16,087,172 shares of Mom's Touch common stock (15.8% of the total issued shares), and the purchase price is 6,200 KRW per share. The tender offer period is until the 15th of next month. Korea F&B Holdings is a special purpose company (SPC) established in 2019 by the private equity fund KL&P (KL&P Partners).

Mom's Touch explained the reason for delisting as follows: "The tender offeror (Korea F&B Holdings) aims to secure flexibility in management activities and speed in decision-making of the target company (Mom's Touch) through delisting, thereby continuously maintaining and developing competitiveness," and added, "As a listed company, negative reports could lead to a decline in franchise sales, so delisting was carried out to minimize external influence."

Mom's Touch was listed on the KOSDAQ market in 2016 through a SPAC merger. At that time, the listing name was Haemaro Food Service. Former Chairman Jung Hyunsik, who founded Mom's Touch, sold the company to the private equity fund KL&P Partners in December 2019. The company changed its name to Mom's Touch & Company in March last year. If the voluntary delisting succeeds, it will return to being an unlisted company after six years.

Last year, Mom's Touch faced conflicts as franchisees protested unilateral raw material price increases, and it is currently under investigation by the Fair Trade Commission regarding related matters. Amid growing conflicts with franchisees, KL&P Partners reportedly judged that it would not be beneficial for Mom's Touch to remain a listed company with specific performance disclosures.

Up to the third quarter of last year, Mom's Touch's cumulative sales amounted to 221.68646 billion KRW, a 4.4% increase compared to the same period the previous year. Operating profit during the same period was 29.24498 billion KRW, a 53.9% increase. Some analysts suggest that the decision to delist was also made to prevent noise during the future sale process of Mom's Touch.