Kespion Transforms Business Structure by Acquiring Future Cash Cow 'MBTV'

Kespion, a KOSDAQ-listed company that supplies antennas for mobile phones, announced on January 22 that it has issued convertible bonds (CB) to acquire a company specializing in acne patches.

Kespion issued convertible bonds worth approximately 2.1 billion KRW (about 2.1 billion won) to acquire 100% of the shares in MBTV, making it a subsidiary. Through this acquisition, Kespion aims to diversify its business portfolio beyond its existing focus on electronic components for major conglomerates, expanding into the consumer goods and beauty healthcare sectors.

Kespion supplies antennas and communication components for mobile phones to major domestic conglomerates. As growth in the mobile phone market has slowed, the need to diversify revenue sources and secure new growth engines has become apparent.

A company representative stated, "We will enhance our competitiveness by applying the precision manufacturing technology and quality control know-how accumulated through our antenna business to the production of acne patches," adding, "Based on stable cash flow, we plan to enter new high-growth beauty and healthcare businesses to increase our corporate value over the medium and long term."

MBTV is known to possess facilities and competitiveness that allow it to perform both fabric agitation coating and die-cutting simultaneously-capabilities only possible for technically advanced companies in the acne patch sector. Since early last year, the company has invested heavily in development, filed five design patents, and completed trial runs of its equipment.

MBTV has signed a long-term partnership agreement with a company that exports acne patches to globally renowned brands. Based on this, the company is currently focused on the early acquisition of ISO13485 certification. With T&L, the market leader in acne patches, as its benchmarking model, MBTV aims to strengthen its technological capabilities and production capacity to improve its profit structure. The company expects rapid growth in overseas markets by securing competitiveness in the functional hydrocolloid patch sector.

Kespion plans to leverage its accumulated production and quality management experience, global network capabilities, and industrial film substrate manufacturing technology-gained through years of supplying to major conglomerates-and apply them to beauty and medical substrate manufacturing, thereby creating synergy with the acquired company and turning it into a future cash cow.

Among the advanced know-how Kespion has accumulated over decades of antenna production, the company will apply its ferrite and LTCC film substrate manufacturing technology to acne patch substrate production. The die-cutting process technology accumulated by its Vietnamese subsidiary, Wooritech VIETNAM CO., LTD, will also be utilized in acne patch die-cutting.

The convertible bond issuance terms include a zero percent coupon rate and a one percent yield to maturity, with a conversion price set at 500 KRW per share.

A company representative commented, "Even if all bonds are converted into shares, the exercise of conversion rights would result in less than a 10% dilution of existing shareholders' equity, so the risk of dilution is not significant." The representative added, "The convertible bond issuance is a strategic choice designed to minimize Kespion's financial burden, while MBTV can pursue future-oriented growth together with a listed company."