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CJ CheilJedang Pursues M&A Deals to Expand Food, Bio Businesses
Aggressive Growth Strategy
CJ CheilJedang Pursues M&A Deals to Expand Food, Bio Businesses
  • By Choi Mun-hee
  • June 12, 2018, 11:59
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CJ CheilJedang is making the new investment to promote the food and biological resources sectors as the market leader at home and abroad.
CJ CheilJedang is pushing for M&As to expand its food and bio businesses. 

Consumers will be able to purchase CJ CheilJedang’s frozen pizzas at large retailers in the U.S., such as Walmart and Costco, in the future.

CJ CheilJedang Corp., a subsidiary of conglomerate CJ Group, is considering acquiring a U.S.-based food processor, Schwan‘s Co. The company is pursuing an aggressive merger and acquisition (M&A) strategy as part of its plan to boost competitiveness in the overseas foods business. Experts say that CJ CheilJedang, which has been a traditionally domestic market-oriented firm, is seeking to create its future growth momentum through the global market strategy.

Schwan‘s Co. ranks second in the U.S. frozen pizza retail market after Nestle. When CJ CheilJedang succeeds in its takeover bid, it will be able to accelerate its North American market invasion based on diverse distribution channels owned by Schwan‘s Co. The price of CJ CheilJedang shares is also on a steep rise with the company securing a growth momentum in the global market. It hit a new low at 316,000 won (US$293.82) at the end of April but is now about to surpass 380,000 won (US$353.32) as foreign and institutional investors have been on a buying spree.

CJ CheilJedang is not making one-off M&A and investment moves. The firm decided to invest 14 billion won (US$13.02 million) in Maniker Co., a Korea-based company mainly engaged in the manufacturing and distributing of chicken products., on June 8, a day after it announced its plan to acquire Schwan‘s Co. CJ CheilJedang will become the second largest shareholder of Maniker by participating in the company’s capital increase. The equity investment in Maniker is intended to promote the feed business. Easy Bio Inc., which owns Maniker as a subsidiary, is leading the domestic feed market and hopes it can improve competitiveness through the partnership with CJ CheilJedang.

The aggressive M&A and investment strategy of CJ CheilJedang is part of the group’s plan to go abroad and promote both food and bio businesses.

CJ CheilJedang has been promoting its food and bio businesses for years. The company has also seen its sales and profits continue to grow. It posted 4.35 trillion won (US$4.04 billion) in consolidated sales in the first quarter this year, up 12.5 percent from a year earlier. Its operating profits also increased 9.2 percent to 210.3 billion won (US$195.54 million) over the same period. This is because the sales of processed foods showed a rapid rise due to the growth of home meal replacements (HMR). In addition, the company’s bio sector also contributed to the sales and profit growth as shipments of amino acid for livestock increased. The acquisition of foreign firms, including CJ Seleta in Brazil, also played a role.

Its bio business division saw the annual sales exceed 2 trillion won (US$1.86 billion) for the first time last year. In the green bio market worth between hundreds of billions of won and trillions of won by item, which has become an arena for competition among global companies, such as Germany’s Evonik Industries AG Co. and Japan’s Ajinomoto Co., CJ CheilJedang has the largest share in the markets of four items – lysine, tryptophan, nucleic acid and valine.