With chief back at helm, CJ readies for bold moves

By 박한나
  • Published : Sept 11, 2016 - 16:38
  • Updated : Sept 11, 2016 - 18:00

 [THE INVESTOR] With its chairman Lee Jay-hyun back at its helm, CJ Group could emerge as a big buyer in Korea’s merger and acquisition scene, industry watchers predict. 

The CJ chairman, convicted last year on charges of embezzlement and tax evasion, was the only chaebol tycoon granted amnesty by President Park Geun-hye through a special pardon last month. 

CJ chairman Lee Jay-hyun

The 56-year-old chief, however, has not returned to management, as he requires hospitalization for treatment of an inherited neurologic disorder.

Nevertheless, expectations are growing in the market that CJ, which spans food and entertainment, may turn aggressive on acquisition targets -- in particular Tongyang Magic Inc.

“The group will continue to focus on big-ticket deals, while subsidiary companies seek out their own opportunities to expand overseas. In deal making, we may appear somewhat different (compared to the time before the chairman’s return,)” a CJ Group official was quoted as saying by Yonhap.

CJ Corp. is among the five bidders selected to proceed to the second round of auction for Tongyang Magic, a local kitchen appliance sales and rental firm wholly owned by the private equity consortium NH-Glenwood.

The group previously had its eye on Coway, Tongyang Magic’s bigger rival, but had to forgo a bid after its consortium partner China’s Haier pulled out.

Local reports put the Tongyang Magic deal roughly at 500 billion won ($456 million), far smaller than Coway’s over 2 trillion won estimate.

NH-Glenwood is expected to open binding bids for the sale of its 100 percent stake in Tongyang Magic later this month.

CJ is also in the acquisition race for the Korean operation of US fast-food giant McDonald’s, vying with Korea’s second-largest dairy firm Maeil Dairy Industry and internet game developer NHN Entertainment Corp.

Mergers and acquisitions have been the key driver behind the group’s rise to the 14th largest conglomerate with 23 trillion won in assets. In one of its biggest purchases ever, the group in 2012 spent 1.7 trillion won on Korea Express and created the country’s largest logistics firm CJ Korea Express.

The group’s total investment reached a peak of 2.9 trillion won in the year, but went downhill the following year when Chairman Lee’s legal troubles began.

Last week, CJ Korea Express announced a 47.6 billion-won deal to buy a 31.5 percent stake in Century Logistics Holdings, Malaysia’s No. 2 logistics company, to expand its distribution channel in Southeast Asia.

Another unit, CJ CheilJedang Corp., is soon to sign a contract to purchase research and patented sources in bioengineering from US bio venture company Metabolix Inc. for $10 million, the company said.

By Lee Sun-young/ The Korea Herald (milaya@heraldcorp.com)