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(Courtesy of Texon) Southeast Asia-focused Navis Capital Partners is tapping South Korean companies and private equity firms to sell Texon, a Hong Kong-based footwear components supplier to Adidas, Nike and other global brands. BDA Partners, Navis' advisor on the sale, sent information memorandums on Texon to Korean companies in footwear and relevant businesses, as well as to PE firms earlier this month, according to people with knowledge of the matter on April 14.Texon produces shoe parts such as toe puffs, soles and heels. It supplies them to over 300 footwear brands including Clarks, Reebok and Timberland. Navis hopes the sale will bring 350 billion won to 400 billion won ($285 million-$325 million). The asking price is equivalent to about 11 to 13 times Texon's EBITDA and more than double its estimated sales of 180 billion won for 2022.Mirae Asset Management's private equity arm and other Korean PE firms are considering bidding for the shoe sole manufacturer.Some PE houses are contemplating teaming up with strategic partners, including footwear and sportswear manufacturer DNACT Co., formerly known as Hwaseung Corp. DNACT is a major supplier for Texon under an original equity manufacturer agreement.HIGH ENTRY BARRIERSEstablished in the UK in 1947, Texon controls 20% of the world's footwear components market. In the toe puff and insole segments, it boasts the largest shares of 37% and 33%, respectively."The company looks attractive not only for its manufacturing facilities and market share, but in terms of securing its original technology," one of the PE industry sources told Market Insight, the capital market news outlet of The Korea Economic Daily.Texon's biggest customer is Adidas, as its exclusive supplier of sneaker heels. Texon's non-woven fabrics are also used for handbags and apparel.Texon has been enjoying its competitive advantage in the key footwear components market, which has high entry barriers since global brands tend to maintain long-term relationships with key suppliers.It operates five production facilities in Asia, the UK and other parts of Europe.Navis acquired Texon from Barclays Ventures in 2016 for an undisclosed sum. It recently renewed the sale after its first attempt in 2021 failed due to the unfavorable market conditions, following the onset of the COVID-19 pandemic.Earlier this year Navis became known in South Korea for its $1 billion deal to sell Singapore-based electronic waste disposal and recycling company TES Envirocorp Pte. Ltd to SK Ecoplant Co.Meanwhile, North Asia-focused MBK Partners in 2021 bought two Korean footwear textile manufacturers for a combined $343.6 million. They are long-term suppliers to Nike and Adidas.By Jun-Ho Chachacha@hankyung.comYeonhee Kim edited this article.
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