Accelerating M&A Moves
CJ Cheil Jedang will acquire a Russian food company. This marked the first time that CJ took over a Russian. Some industry watchers predict that CJ is restarting its merger and acquisition (M&A) projects, which has been stalled before its chairman Lee Jae-hyun’s return to management.
It was confirmed that CJ Cheil Jedang was negotiating a deal with a frozen food company in Russia, according to the investment banking (IB) industry on November 22. The negotiation process is at its final stage. CJ Cheil Jedang is expected to seal this deal as early as next month. It is said that the price will be between about 30 billion won and 40 billion won.
The decision by CJ to acquire the Russian frozen food company is interpreted as a measure to put a spur to the expansion of its sales in the rapidly growing Russian market. The Russian frozen food market more than doubled from four trillion won in 2007 to nine trillion won in 2015 for eight years and is expected to hit 10 trillion won next year.
The Korean M&A industry is paying attention to whether or not the CJ Group will aggressively seek M&A deals with this acquisition as momentum. The business group has been reluctant to engage in M&As now that the absence of the group's chairman has delayed big investment decisions. Representative cases are that the CJ Group lost in a battle to take over major Chinese bio company Meihua and Singapore logistics company APL Logistics. In Korea, the CJ Group took part in a race to acquire McDonald's Korea and Tong Yang Magic only to fail.
However, CJ Cheil Jedang has taken over overseas companies such as US bio venture company Metabolix (11.2 billion won) and Malaysian logistics company Century Logistics (47.1 billion won) since August when its chairman Lee received a presidential pardon in a move to start its M&As.
Industry experts forecast that CJ Cheil Jedang will become more aggressive in M&A deals to take over overseas companies as it announced large-scale group-wide investments for next year. The CJ Group plans to invest more than five trillion won next year. This figure is almost triple its investment of last year (1.7 trillion won).