Bio Green Panda ‘World’s No. 1’ at CJ CheilJedang – Mael’s business newspaper

CJ CheilJedang has started selling its bio business unit, the No. 1 green bio company in the world. The estimated ransom is expected to be in the 5 to 6 trillion won range.

According to the investment banking (IB) industry on the 18th, CJ CheilJedang is pursuing tie-ups behind the scenes with multiple global private equity funds (PEFs) to sell its bio-business division. Morgan Stanley, a global IB, is responsible for overseeing the sale, and is expected to proceed with the main bid as early as next month.

The bio division that CJ CheilJedang is trying to sell is aimed specifically at the bio-green industry, which produces food seasonings and amino acids for feed using micro-organisms. The market share of amino acids for feed, such as lysine and tryptophan, is in first place in the world.

Related businesses believe that CJ CheilJedang is considering selling its bio-industry division to provide ammunition for investment in new businesses.

An official in the mergers and acquisitions (M&A) industry said, “CJ Group can use the large amount of money it will receive by selling its bio division to expand the competitiveness of its core food business or enter new business by acquiring companies. other businesses,” he said. CJ CheilJedang’s bio division has been consistently generating profits as a ‘cash cow’. Last year’s operating profit before depreciation (EBITDA) reached 525.9 billion won. As the third quarter of this year, EBITDA was recorded at 487.5 billion won.

Since the corporate value of food companies is generally between 7 and 8 times EBITDA, the corporate value of CJ CheilJedang’s bio division is estimated to be in the range of 5 to 6 trillion won.

Accelerate business reorganization through M&A through booms and busts

CJ CheilJedang’s business mainly includes the food, bio-, and logistics sectors, which produce sugar, flour and cooking oil. Last year, sales in the bio sector were KRW 4.1343 trillion, accounting for about 23% of CJ CheilJedang’s total sales, and the main focus is the business-to-business (B2B) business that produces amino acid products. for food, such as lysine and tryptophan.

It is a global company with over 90% of sales generated overseas. Lysine is known to be an immune boosting substance and is added to pig feed to balance nutritional intake. Tryptophan maintains the balance of amino acids, which are the building blocks of protein, in the body and increases immunity by stimulating antibody production.

Although CJ CheilJedang’s bio-business has a lower public awareness than food businesses such as ‘Hetbahn’ and ‘Bibigo’, it is a sector that has grown the company into a global food and beverage company along with sugar . The MSG (monosodium glutamate) business was launched in 1963 as ‘Breeze’ after receiving a technology transfer from the Japanese sweetener company Ajinomoto.

In 1988, the company established its first local corporation in Indonesia and entered the market for the amino acid lysine for feed, which was an opportunity for the company to leap forward.

The green bio industry currently has 11 large production facilities in major overseas countries, including the United States, China, Indonesia, Malaysia and Brazil. It has eight representative brands, including lysine, tryptophan, and valine, the world’s No. 1 nutritional amino acid brand.

The performance of CJ CheilJedang’s green bio business improved significantly before and after the COVID-19 incident. This is because while competitors had problems with delivery due to logistics problems, CJ CheilJedang quickly expanded its market share in the global market by using its global network.

Bio-industry sales, which were around KRW 2.9817 trillion in 2020, rose sharply to KRW 3.7312 trillion in 2021 and KRW 4.854 trillion in 2022.

However, things have changed a bit since last year.

This is because as the demand for stock production is decreasing due to the global economic recession, the demand for green bio is also decreasing. The bio green industry is currently number one in the world, but it is subject to great ups and downs depending on the state of the industry.

For this reason, the market predicts that the Chairman of CJ Group, Lee Jae-hyun, will seek new businesses using weapons to build them by selling the bio-business division.

In fact, CJ Group sold CJ Hello Vision to LG Group and its pharmaceutical business (CJ Healthcare) to Kolmar Korea in 2018.

With the proceeds from the sale, CJ CheilJedang purchased Schwan’s Company, the second largest frozen food company in the United States, and Schwan’s Company’s performance has improved. As a result, CJ CheilJedang’s US food sales, which were about 364.9 billion in 2018, increased to 4.0356 trillion.

The market expects CJ CheilJedang to use the proceeds from the sale of its green bio business to engage in large-scale M&A, such as ‘the second Schwan’s’.

[나현준 기자 / 이효석 기자]