Toy and game content specialist SONOKONG has decided to acquire 90% of the equity of Klasse Auto, the largest official Volkswagen dealer in Korea. The company emphasized that this acquisition could trigger a rebound in performance for Klasse Auto, which will be reflected in SONOKONG's consolidated results starting from the second quarter.
According to the Korea Exchange on the 2nd, SONOKONG announced that it would acquire 90% of Klasse Auto's equity (including 9% of its own shares) after the regular market closing on May 30. The acquisition price is 990 million won.
Klasse Auto was selected as an official Volkswagen dealer in August 2005 and has maintained its position as the top dealer in the country since 2008. It previously changed hands after being acquired by the private equity firm VIG Partners. The company recorded sales of 153 billion won in 2022, 117.5 billion won in 2023, and 104.7 billion won last year.
SONOKONG also announced on the same day the stock transfer agreement involving a change of the largest shareholder and the decision for a paid-in capital increase. HK Mobility Company will complete a 5 billion won capital increase on the 18th and become the new largest shareholder of SONOKONG, succeeding the existing H2 Partners.
SONOKONG has been facing poor performance. The consolidated revenue fell from 66.7 billion won in 2022 to 32 billion won last year, a more than halving in two years, while operating losses expanded from 6 billion won to 9.5 billion won during the same period. Accordingly, its stock price also dropped from the 2,000 won range to 1,149 won (based on the closing price) on May 30.
SONOKONG noted that this acquisition of Klasse Auto will serve as a momentum for improving the company's performance. A representative from SONOKONG stated, "We expect to secure both stability in existing business and growth potential in new ventures, ultimately achieving a turnaround to profitability."
Meanwhile, SONOKONG will issue convertible bonds (CB) worth 32 billion won to use for operating and facility funds. The 11th tranche CB, worth 22 billion won, and the 12th tranche CB, worth 5 billion won, will be paid in by the new largest shareholder HK Mobility Company on the 18th and 27th respectively. The remaining 13th tranche CB is set to be paid in by KB Securities on the 27th.
A representative from SONOKONG mentioned, "The newly issued CB will be prioritized for securing quantities for the Nintendo Switch 2, which will be officially released on the 5th, among other reliable operations of existing businesses."