Global Sae-A scraps paper unit sale, vows to build 'cash cow' instead

Global Sae-A Group has called off its plan to sell its paper subsidiaries — Tailim Paper, Tailim Packaging and Jeonju Paper — opting instead to develop them as an in-house earnings engine. The group had explored a sale of the paper business at around 2 trillion won ($1.3 billion) through investment banks earlier this year, but ultimately reversed course. The company cited a turnaround in earnings and the benefits of vertical integration as reasons for the decision. Deal market observers, however, say a wide gap between the seller's 2 trillion won price expectations and what prospective buyers were willing to pay was likely a key factor.

Global Sae-A Group announced Monday that it was halting its review of a sale of the paper subsidiaries. The assets under consideration included Tailim Paper, Tailim Packaging, Jeonju Paper, Jeonju One Power, Jeonju Power and Dongrim Logistics — spanning paper, energy and logistics operations. The group had begun exploring a sale earlier this year after receiving inquiries from multiple investment banks and gauging interest from potential acquirers.

Global Sae-A appointed UBS as the sale manager and distributed teaser letters and investment memoranda to prospective buyers. Multiple financial investors are understood to have participated in a preliminary bidding round. The group had been targeting a total enterprise value of around 2 trillion won for the paper business.

Price was the sticking point. Global Sae-A acquired Tailim Paper and Tailim Packaging in 2019 for about 730 billion won, then added Jeonju Paper and Jeonju One Power in 2024 for roughly 650 billion won — a combined outlay of approximately 1.38 trillion won across the two deals. Factoring in the vertically integrated structure linking corrugating medium, packaging boxes, newsprint, cogeneration power and logistics, the group had expected to command a sale price above 2 trillion won.

Buyers, however, had reservations. Tailim Paper improved its earnings last year, but Tailim Packaging and Jeonju Paper had yet to fully exit the red. While the group's dominant market position and vertical integration were seen as strengths, South Korea's paper industry is sensitive to parcel delivery and retail conditions, raw material costs, energy prices and export price swings. For a deal of this scale, buyers also faced the burden of verifying how long the earnings recovery would last.

Last year's results were mixed across the subsidiaries. Tailim Paper, which serves as the operating holding company for the paper segment, posted consolidated sales of 1.52 trillion won and operating profit of 48 billion won in 2025, up 21.2 percent and 93.5 percent, respectively, from the prior year. The improvement was attributed to the vertical integration linking raw paper production with corrugated box manufacturing.

Tailim Packaging, by contrast, only managed to narrow its losses. The company's consolidated sales rose to 753.9 billion won in 2025 from 715.4 billion won in 2024. Its operating loss shrank from 16.6 billion won to 5 billion won, and its net loss narrowed from 20.5 billion won to 9.2 billion won.

Jeonju Paper was acquired by Tailim Paper, a Global Sae-A affiliate, in 2024. The company had been in the red before joining the group and subsequently underwent a production restructuring and cost-reduction drive. Its consolidated operating loss narrowed 39.4 percent year-on-year to 10.9 billion won in 2025. The company said it returned to profit in January this year and expects to post its best annual earnings since adopting its current name in 2008.

The earnings rebound seen so far this year was the main justification Global Sae-A offered for halting the sale. The group said its paper subsidiaries posted cumulative sales of 904 billion won through May, up about 7 percent from the same period last year. Operating profit over the same period came to 73 billion won, with EBITDA at approximately 110 billion won on a preliminary basis — representing year-on-year increases of more than 100 percent and more than 50 percent, respectively.

The full-year outlook is more ambitious. Global Sae-A projected annual sales from its paper units of between 2.2 trillion won and 2.3 trillion won this year, with operating profit of 190 billion won to 200 billion won and EBITDA of 280 billion won to 300 billion won. Compared with last year, that would represent sales growth of more than 10 percent, operating profit growth of around 200 percent and EBITDA growth of more than 80 percent. Should EBITDA approach 300 billion won, the group's argument for a 2 trillion won enterprise value would gain considerable support.

Deal market participants, however, say it would have been difficult to justify a 2 trillion won valuation based solely on projected earnings for a single year.

The decision to halt the sale will also shape Global Sae-A's broader portfolio strategy. The group grew from its base in apparel ODM manufacturer Sae-A Trading before expanding through a series of acquisitions including Tailim Packaging, Ssangyong E&C and Jeonju Paper. The paper business has been regarded as a relatively stable cash generator within the group. A completed sale would have eased debt and freed up capital for new ventures, but with the deal off the table, the group is now committed to growing the paper business on its own for the foreseeable future.

"Our position from the outset was to make a comprehensive judgment on whether to sell, with the highest priority placed on the overall health of the domestic paper industry and enhancing corporate value," a Global Sae-A Group official said. "At this point, we have decided to halt the sale review based on our confidence that the paper subsidiaries can further consolidate their position as the industry leader, underpinned by structural growth momentum."