[Exclusive] Megastudy Education Loses 54 Billion Won Due to Failed Acquisition of ST Unitas, 44 Billion Won Also Unrecovered

Only 73.6 Billion KRW Recovered Last Year... Where Did the Remaining 100 Billion KRW Go?
Losses Incurred Without Even Managing the Business Due to Downturn in Civil Service Exam Market

Megastudy Education has confirmed that it recorded a loss by treating approximately 54 billion KRW out of the 170 billion KRW it was supposed to recover from the failed acquisition of ST Unitas as 'unrecoverable money.' Additionally, it was revealed that there is still about 44 billion KRW that has not yet been recovered.

According to the Financial Supervisory Service's electronic disclosure system on the 3rd, Megastudy Education reflected 53.8 billion KRW of the advance payments classified as other assets last year as impairment losses. Impairment losses are recorded as other expenses and affect net profit. As a result, Megastudy Education's net profit last year decreased by 52.8% compared to the previous year.

Earlier, in October 2022, Megastudy Education signed a contract to acquire 95.9% of the shares of ST Unitas, the operator of Gongdangi, from Bain Capital (BCC VERITAS AGGREGATOR, LP) and others for 171.8 billion KRW.

The contract deposit and balance payment were made within about a month, and Megastudy Education recorded the acquisition amount of 171.8 billion KRW as 'advance payments for acquisition of subsidiaries' in its 2022 business report. An advance payment means money paid in advance before receiving any goods.

The reason Megastudy Education accounted for the acquisition payment as an advance payment instead of immediately receiving the ST Unitas shares is analyzed to be because the Fair Trade Commission's corporate merger review was still pending. ST Unitas operates a civil service exam academy business under the Gongdangi brand. At that time, Gongdangi held the number one market share in online lectures for 7th and 9th grade civil servants, military personnel, and firefighters, with Megastudy ranking second.

The Fair Trade Commission disapproved Megastudy Education's acquisition of ST Unitas in March last year. The combined market share of the two companies exceeded 67% as of 2022, raising concerns that the merger could restrict competition in the civil service exam academy market.

Although the acquisition fell through, Megastudy Education did not recover all the money. As of last year, Megastudy Education recovered 73.6 billion KRW of the advance payments. The remaining amount is 98.2 billion KRW, of which 53.8 billion KRW was recorded as a loss. Regarding this, a Megastudy Education official explained, "This is the result of re-evaluating the amount by reflecting the downturn in the civil service market and the decline in market value."

In fact, ST Unitas, which recorded sales of 158.4 billion KRW and operating profit of 3.2 billion KRW in 2022, posted sales of 72.4 billion KRW and an operating loss of 2.5 billion KRW last year. Additionally, during that period, Bain Capital conducted a paid-in capital reduction, reducing current assets from 128.4 billion KRW to 47.2 billion KRW. Megastudy Education ended up losing money without properly managing ST Unitas after the acquisition contract.

Furthermore, it was revealed that Megastudy Education has yet to receive 44.4 billion KRW of the acquisition payment. A Megastudy Education official stated, "Details regarding fund recovery are disclosure matters, and we will inform through disclosures as procedures progress."

Meanwhile, in December last year, Megastudy Education sold its civil service division, 'Mega Gongmuwon,' to a newly established corporation called 'Next Study.' Yoon Hoon-hee, CEO of Next Study, is a former Megastudy employee and previously served as vice president of 'Beautirsha,' a subsidiary of ST Unitas. Beautirsha was acquired by Ivy Kim Young, a Megastudy affiliate, at the end of last year.