Merger Between Classys and Ilooda Likely to Reduce Local Competition

• On 25 June, Classys (214150 KS) announced a merger with Ilooda (164060 KS). The merger ratio is set at 0.1405237 to 1 for Classys and Ilooda.

• This merger aims to combine Classys’ expertise in high-intensity focused ultrasound (HIFU) with Ilooda’s in micro-needle radio frequency (RF) and laser technologies.

• We have a positive view of this merger between Classys and Ilooda. This merger is likely to reduce the overall competition in the aesthetics devices market in Korea.

On 25 June, Classys (214150 KS) announced a merger with Ilooda (164060 KS). Shares of Classys (market cap of 3.3 trillion won) are down 1.4% today to 51,200 won. Shares of Ilooda (market cap of 0.15 trillion won) are down 6.4% today to 7,180 won.

The merger price is 52,774 won for Classys and 7,416 won for Ilooda, and the resulting merger ratio is set at 0.1405237 to 1 for Classys and Ilooda. After the merger, the surviving company is Classys and Ilooda will be merged into Classys. The largest shareholder is BCPE, an investment arm of Bain Capital, which currently holds a 61.57% stake in Classys, and plans to maintain its position as the largest shareholder with the stake changed to 59.32% post merger.

Improved product offerings - This merger aims to combine Classys’ expertise in high-intensity focused ultrasound (HIFU) with Ilooda’s in micro-needle radio frequency (RF) and laser technologies. This merger which is expected to be completed in October 2024, follows the equity investment that Classys made an initial equity investment in Ilooda in September 2023.

• Classys is known for its Shurink series with more than 15,000 installed devices globally. Shurink is a laser treatment device that can help to lift and rejuvenate the skin on the face. Classys ranks first in market share in the HIFU market in major countries, and has recently been expanding into the monopolar RF market through its new product, Volnewmer.

• Ilooda’s flagship product, the Secret series, has sold over 5,000 units. Secret series devices are capable of powerful heating and denaturation, which stimulates fibroblasts in both the subdermal and dermal layers for effective skincare.

Conclusion First

We have a positive view of this merger between Classys and Ilooda. Although Classys is a much bigger company, this merger is likely to reduce the overall competition in the aesthetics devices market in Korea.

In addition, each company has different geographic strengths globally. Classys has geographic strengths in Asia and Latin America while Ilooda's focus is on the U.S. and European markets. Therefore, one of the synergies of this merger will be improved distribution across different geographic markets. This merger is also likely to result in combining their R&D strengths to accelerate development of next generation beauty platforms and products.

Classys shares have performed well so far this year (up 36% YTD) but its valuations remain reasonable. Classys is currently trading at P/E of 26.5x, EV/EBITDA of 19.5x, and P/B of 6.6x in 2025 (based on consensus earnings estimates).