Wobbly capital markets and sinking consumer and business confidence amid political unrest and unfavorable external conditions have sent chills to the South Korean merger and acquisition (M&A) market with Hollys Food and Beverage Co. (F&B) becoming latest upset.

Attempt to sell the Korean coffee chain Hollys Coffee by IMM Private Equity has flopped due to price differences with potential buyers from China and Taiwan.

According to investment bank industry sources on Thursday, IMM PE’s negotiation with strategic investors from China and Taiwan to sell its 91.82 percent stake in Hollys F&B including management rights fell through.

A well-informed source who asked to be unnamed due to sensitivity said IMM PE and its counterparts negotiated over the acquisition terms for over a month but failed to reach an agreement, and it is likely for the private equity to focus on upgrading Hollys F&B’s corporate value now and place the coffee chain back on the market for sale about two or three years later.

Hollys F&B’s business performance improved rapidly after IMM PE took over the coffee chain operator in 2013. Its earnings before interest, tax, depreciation and amortization (EBITDA) is expected to reach above 20 billion won ($17 million) this year, doubling from what it earned before the private equity took over.

Market experts say local buyout market is in its worst year in recent five years as other M&A deals including country’s third largest logistics player Dongbu Express and fourth largest parcel delivery service company Logen Co. have broken down or about to fall apart.

Many of the major M&A deals have foundered in the course of negotiation as the gap between seller and buyer has widened due to uncertainties about economic outlook, market experts said. A deal also is harder when the sale transaction involves private equity firms, they added.

Private equity firms are more sensitive on pricing as it is directly linked to rewards they earn from investments. The private equity fund operators want to make sure they assets are fully recognized for the price value, said an unnamed private equity firm officer. The story goes the same for the buyer side. Strategic investors on the other hand place greater weight on non-price factors such as synergy effects with current business.

By Kang Doo-soon, Han Woo-ram, and Chun Gyung-woon

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