Mega Coffee emerges as unlikely bidder for Homeplus Express

Mega MGC Coffee, a yellow-hued budget coffee chain with nearly 4,000 stores, is reportedly in the bidding for Homeplus Express, the supermarket unit of court-supervised Homeplus, in what would mark a dramatic leap beyond its cafe roots.

According to industry sources Wednesday, MGC Global, the company behind Mega MGC Coffee, submitted a letter of intent for Homeplus Express, one of two bidders to do so by Tuesday's deadline. MGC Global declined to confirm its submission as of press time.

Homeplus said Tuesday that several companies had submitted letters of intent, though it declined to name them or disclose terms, saying its sale manager is still in discussions. "Additional submissions may be possible depending on how things develop," the company said in a statement.

The sale of Homeplus Express, a neighborhood-scale supermarket chain and the retailer's most valuable remaining asset, has become the centerpiece of its court-approved restructuring plan after attempts to sell Homeplus as a whole fell through.

The Express division runs 293 stores nationwide, generating annual revenues of around 1.1 trillion won ($730 million) in 2024, with roughly 90 percent of locations in densely populated urban areas. The unit's estimated market value has slumped to around 300 billion won, down sharply from the nearly 1 trillion won floated two years ago.

The sale had attracted considerable speculation about which retail giant might step in, particularly after Eugene Group went as far as conducting due diligence before walking away, leaving few to anticipate that a coffee chain would be the one to raise its hand.

"A supermarket acquisition is unexpected," said one industry insider, who saw the move as a play for synergies using Homeplus Express' distribution network.

Industry observers see particular potential in quick-commerce synergies, with nearly 80 percent of Homeplus Express stores equipped with same-hour delivery logistics that could tie into Mega Coffee's mobile app, extending its reach beyond coffee to ready-to-drink beverages and private-label food products.

Mega Coffee was founded in 2010 and sold to Wooyoon, a real estate leasing company, along with private equity firm Premier Partners, for 140 billion won in 2021. Wooyoon Chairman Kim Dae-young, who also serves as CEO of MGC Global, brings decades of experience in food distribution and service, having founded a food ingredient distribution company in 1993.

The outcome of the bidding process will go a long way in determining the survival of a liquidity-strapped Homeplus.

Homeplus had pinned its stabilization plan on 300 billion won from the Express sale and an equal amount in debtor-in-possession financing, but major creditors have refused to come to the table. MBK Partners, Homeplus' largest shareholder, stepped in with 100 billion won in emergency funds last month.

Samil PwC, which is managing the sale, will coordinate with the Seoul Bankruptcy Court on selecting a preferred bidder, who will then undergo due diligence before a final contract is signed. The court's deadline for approving Homeplus' rehabilitation plan is May 4.