Looking for Global M&A Targets

Affiliates of CJ Group including CJ CheilJedang, CJ Korea and CJ ENM Express are stepping up their efforts for successful global M&A deals.
Affiliates of CJ Group including CJ CheilJedang, CJ Korea Express and CJ ENM Express are stepping up their efforts for successful global M&A deals.

Lee Jae-hyun, chairman of the CJ Group, is starting to push forward with global mergers and acquisitions (M&As) after wrapping up an overhaul of the group’s organization. Lee presented the vision of "Great CJ," pledging to post 100 trillion won (US$90 billion) in sales by investing 36 trillion won (US$32.4 billion) by 2020.

CJ CheilJedang and CJ Korea Express have aggressively pursued M&A deals. On top of  them, CJ ENM, which was established last month, is also looking for global M&A targets.

First of all, CJ CheilJedang is currently pursuing the acquisition of US frozen food company Schwan's. The company's annual sales stand at US$3 billion and its acquisition price is expected to reach a similar level. This is the largest M&A target the CJ Group has ever pursued. Acquiring Schwan's will cost 1 trillion won more than that for Korea Express (1.8 trillion won). If Schwan's is acquired, CJ Cheiljedang's sales would grow from 16.5 trillion won last year to 20 trillion won. Considering that Schwan’s has a solid distribution network in the US, sales are expected to increase considerably thanks to synergies after the M&A.

CJ Korea Express is also working on taking over German logistics company Schnellecke to boost its competitiveness in overseas logistics. The company's annual turnover is estimated at 1.1 trillion won so its price is expected to reach more than one trillion won. Given that CJ Korea Express's 10 global M&A deals over the past five years cost 850 billion won, CJ Korea Express is placing a big bet on this deal to become a 10 trillion won company.

In addition, CJ ENM, which was created by merging CJ O Shopping with CJ E&M, recently joined CJ CheilJedang and CJ Korea Express in looking for a good M&A offering. The company is said to be considering taking over European multi-commerce company Studio Moderna. Its acquisition price is about 500 billion won. Although its acquisition price is not more than one trillion won, the M&A deal can be quite meaningful in that it will be the first M&A deal of CJ ENM as a newly established company.

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