beyondbrics

The global financial crisis is throwing up plenty of opportunities for EM companies with money to burn.

Fresh from its acquisition of Italian leather goods company Mandarina Duck, E-land, the South Korean conglomerate, now has its eyes on the US, where it is in talks to acquire the Los Angeles Dodgers baseball team.

As the FT reported on Tuesday:

The retailer, which has just four stores in the US, said it was hoping to build brand awareness, and analysts said it appeared to want to make the acquisition of LA Dodgers a stepping stone for its expansion into the US.

It’s far from a done deal. E-land is in the running against other shortlisted bidders — including Steve Cohen, a hedge fund billionaire, and Magic Johnson, the former Los Angeles Lakers basketball star — for one of baseball’s biggest franchises.

A deal could be worth as much as $1.5bn, although E-land’s investment is likely to be much lower since it is bidding with a consortium of other investors. One local report put E-Land’s investment at around 150-200bn won ($13-17m).

Still, E-land has come a long way from its beginnings as a small hole-in-the wall clothing store in Seoul to becoming one of Korea’s biggest retailers. Operating profit in 2010 was 462bn won ($411.3m) on sales of 4.6 trillion won ($4.1bn), according to Reuters.

E-Land chairman Park Sung-su has moved aggressively in recent years to expand the business and has high hopes of becoming one of the world’s top 10 fashion companies by 2020, through the creation of a fashion triangle linking China, Vietnam and India.

In addition to Mandarina Duck, the privately-held company has snapped up brands such as Italy’s Belfe and Scottish clothes makers such as Peter Scott and Loch Carron.

“The European fiscal crisis has put many European companies on sale at relatively cheap prices,” a E-land source was quoted as saying at the time of the Mandarina Duck deal. “We made the decision (to buy) since it is a good chance to further penetrate the European market.”

So E-land sees bargains to be have. But could it be overstretching itself with the latest Dodger bid?

As the Korea Herald noted:

Industry sources questioned, however, the cash flow of E-Land as it has poured large amounts into a series of M&As recently.

The group acquired Highla Condo in 2006 and Corea Condo in 2009, becoming Korea’s No. 3 player in the leisure business. It also took over a theme park in Daegu and a company that operates boats on the Han River.

In the fashion business, E-Land has acquired a number of fashion brands, including Italy’s Mandarina Duck, Belfe, Peter Scott and Larjo.

E-land has rejected such concerns, citing its strong growth in the Chinese market. But management should be wary of the risks of indigestion from its M&A binge.

Related reading:
South Korean retailer bids for LA Dodgers, FT
South Korean retailer invests in India’s rising middle class, beyondbrics