This article was published on the 7th at 3:11 p.m. on Signal, a capital markets news service.
CJ CheilJedang (097950) has set an asking price of up to 200 billion won for its starch sugar business, about 100 billion won below the market's valuation. The move is seen as an attempt to lower the bar for a deal and accelerate a restructuring of its business portfolio, while offsetting risks such as fines from a price-fixing case.
CJ CheilJedang recently set the asking price for the starch sugar unit at 200 billion won, according to investment banking sources on the 8th. Samjong KPMG is managing the sale, and financial investors are said to have expressed interest. The market had valued the business at about 300 billion won, applying a multiple of 10 to its annual EBITDA of 30 billion won.
Analysts say the 100 billion won fine imposed on CJ CheilJedang by the Fair Trade Commission in July over alleged price-fixing in starch sugar and other products also contributed to the lower asking price. While the buyer would not assume the fine, the possibility of additional findings remains a source of uncertainty. Taekwang Industrial cut its purchase price by about 5% when it acquired Aekyung Industrial from AK Holdings, following a recall of 2080 toothpaste.
CJ CheilJedang is streamlining its portfolio by divesting non-core operations. A notable example was last year's sale of CJ Feed & Care, its animal feed and livestock subsidiary, to a Dutch company. The starch sugar business generates about 100 billion won in annual revenue, or roughly 1% of total food division sales. The business produces corn syrup, glucose and fructose from corn starch. CJ CheilJedang ranks fourth in the domestic market, behind Daesang, Sajo CPK and Samyang Corp, with a market share of around 10%.
"The mood is to sell quickly while a sale is still possible," an investment banking official said. "Because the asking price was set conservatively, financial investors targeting the business-to-business market are likely to be interested."
