Korea's major toymaker Young Toys, known for its hit product Tobot, will likely be sold to a Hong Kong-based private equity fund, sources said Friday.

They said the Pacific Alliance Group (PAG) has been selected as a preferred bidder for the acquisition and it will soon start proceedings with the Seoul-based company. The PAG's bidding price is unknown, but market observers estimate it at 250 billion won ($226 million).

The private equality fund plans to invest 130 billion won in the deal, while the rest will be raised by the Korea Development Bank and Hana Daetoo Securities.

Market observers said smooth progress of the deal will give Young Toys' biggest shareholder substantial financial gain.

The firm's biggest shareholder is another Hong Kong-based private equity fund, Headland capital partners. It purchased 96.5 percent stake in Young Toys for 60 billion won in 2012, nearly one-fourth of the bidding price.

Established in 1980 by Kim Sang-hee, Young Toys has developed with a series of hit products. The company showed explosive growth in 2009 with Tobot, a plastic transformation robot. It has since sold more than 7.8 million Tobots at home and abroad. Tobots accounts for nearly 60 percent of the firm's total sales.

In 2013, Young Toys became the nation's biggest toymaker by sales.

It reported 110 billion won in sales last year, up from 69 billion won in 2013. Young Toys entered the Chinese market in August with another transformation robot named Biklonz and a 3D animation film featuring the model.

"An animation film featuring Tobot will be released in China in May. In addition, Young Toys plans to expand into other Asian markets, including Taiwan and Singapore, in the near future," an analyst said. "Given these, the company's growth will continue for a while."

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