Chungho Nice to be the shareholder of America’s No. 1 water purifier company

Culligan, the largest water purifier rental company in the US, will become a major shareholder of Chungho Nice, a domestic water purifier rental company. Chungho Nice, which has the 4th largest market share in Korea, is expected to expand its domestic market share and advance into overseas markets in earnest with Culligan as its shareholder.

According to the investment banking (IB) industry on the 9th, Culligan is negotiating to acquire a stake in Chungho Nice. Culligan appointed Kim & Chang as an advisor and is conducting due diligence. According to the results of the negotiations, it is said that they do not rule out the possibility that Culligan will become the largest shareholder of Chungho Nice. Chungho Nice’s corporate value was estimated at about 800 billion won based on 100% stake.

Chungho Nice is a 75.10% stake held by its founder, Chairman Hwi-dong Jeong. Next, affiliated company Micro Filter owns 12.99%, and his younger brother, Vice Chairman Jeong Hwi-cheol, owns 8.18%.

Founded in 1936, Culligan is America’s No. 1 water purifier manufacturing and rental company with more than 80 years of experience. It has entered over 90 countries including Korea. Since 2018, Chungho Nice has established a relationship as an ice machine business partner in the North American market.

Chungho Nice plans to use this investment attraction as an opportunity to take another leap forward. Chungho Nice, founded in 1993 by Chairman Chung, once had a market share of 40% based on its technological prowess, but now it has fallen to the level of 10% due to the offensive of latecomers such as SK Magic, LG Electronics, and Cuckoo.

The reason Culligan paid attention to Chungho Nice was because of the high evaluation of the company’s ice-making technology. Chungho Nice launched the world’s first ice purifier in 2003. Based on this, we entered overseas markets such as the US and Europe.

Culligan saw Chungho Nice’s technological prowess as a business partner in the North American market. Since 2018, Chungho Nice has been supplying ice makers to Culligan through the ODM method. It is understood that Culligan is planning to use this investment as a bridgehead from which it can go beyond simple business cooperation and target Asian markets such as Korea in earnest.

Chungho Nice is planning to open its second heyday with Culligan, the No. 1 operator in the United States and equipped with a global network, as a shareholder. Chungho Nice was founded in 1993 by Chairman Hwi-dong Jeong, a first-generation water purifier engineer in Korea. In the early 2000s, along with Coway, the domestic water purifier rental market was divided.

However, in the 2010s, it gradually began to be pushed back by the aggressive sales offensive of latecomers such as SK Magic, Cuckoo Electronics, and LG Electronics. Unlike competitors who have introduced direct water purifiers where tap water goes through a filter and purifies without a water tank, Chungho Nice insisted on a reverse osmosis water purifier, accelerating consumer churn.

In addition to its main product, water purifiers, it has also entered the home appliance market such as coffee purifiers and air purifiers, but there are many evaluations that it lags behind its competitors. As of the first half of this year, Coway ranked first with 40% of the market share, followed by LG Electronics (18%), SK Magic (13%), and Cuckoo Homesys (13%). Chungho Nice ranked fifth with 10%.

Although the market share has decreased, performance is improving rapidly. This is thanks to the rapid growth of the rental market in the aftermath of the coronavirus pandemic. Chungho Nice’s sales recorded 384.6 billion won in 2017, then decreased to 375 billion won in 2018 and 366 billion won in 2019, then recorded 418.7 billion won in 2020 and 421 billion won last year. Operating profit also slowed to 19.4 billion won in 2017, 800 million won in 2018, and 19.6 billion won in 2019, but increased significantly to 42.5 billion won in 2020 and 44.7 billion won last year.

Chungho Nice is working hard to advance into overseas markets. In order to target the Southeast Asian market, it is discussing the establishment of a joint venture with Techman, Vietnam’s largest water purifier company. If Culligan becomes a shareholder, it is expected to speed up its entry into the global market.

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