Editor’s Note
This article reports on the imminent acquisition of Seoul Auction by Shinsegae, with a potential deal value of up to 230 billion won.
According to industry sources on the 18th, Shinsegae is on the verge of finalizing a contract to acquire Seoul Auction, South Korea’s largest fine art auction house. The review of the per-share price, including a control premium, and the specific business direction utilizing Seoul Auction is reportedly in its final stages.
The price including the control premium is likely to be in the range of 40,000 won per share. News has emerged that the price has been confirmed at over 40,000 won. While the exact price has not been verified, assuming Shinsegae purchases all 5,560,666 shares (a 31.28% stake as of June 30, 2022) held by the largest shareholder (including special related parties) at 40,000 won per share, the acquisition size could reach up to approximately 230 billion won (estimate). This figure excludes treasury shares (937,249 shares, 5.27%). As of August 18, 2022, Seoul Auction’s market capitalization is 368.8 billion won (ranking 208th on KOSDAQ). Shinsegae had already invested about 28 billion won at the end of last year to secure 856,767 shares (4.82%). If Shinsegae acquires all shares of Seoul Auction, it would secure a 36.10% stake (excluding treasury shares), becoming the largest shareholder.
The business direction Shinsegae is considering for Seoul Auction has also been partially confirmed. Shinsegae plans to use Seoul Auction to enter the fields of ‘high-end art’ and ‘high-end jewelry’. Seoul Auction has traditionally focused on distributing artworks across various price points. Once the acquisition by Shinsegae is finalized, it is expected to strengthen its high-value art offerings and expand its categories to include high-value precious metals.
Seoul Auction had previously launched jewelry auctions in 2016. However, due to insufficient scale and competitiveness compared to foreign auction houses, coupled with low consumer interest, it eventually withdrew from the jewelry business. The industry assesses that while the domestic art market is currently booming, the jewelry sector is still considered a niche category.
Consequently, Shinsegae is expected to take on the challenge of re-entering the jewelry market, an area where Seoul Auction previously faced failure. The industry views that Shinsegae has gained confidence in new ventures following the success of its own NFT (Non-Fungible Token) projects, such as those utilizing its character ‘Publia’.
In June, Shinsegae sold Publia NFTs, recording a complete sell-out within one second. Last month, it also held the ‘Centum NFT Festival’ at its Busan Centum City store. Seoul Auction has also established a related company to start a digital artwork trading business and is promoting NFT projects in the art field in collaboration with Dunamu.
The art business can be usefully utilized for existing VIP marketing, and recently, with the application of NFTs, the barrier to purchasing art has been lowering, especially among younger generations. In this environment, synergy between art auctions and NFT businesses is anticipated. Furthermore, there are forecasts that Shinsegae, having absorbed Seoul Auction and becoming a major player in the domestic art market, will exert strong influence within the domestic business and artist networks.