South Korean food giant CJ CheilJedang Corp. will sell its wholly-owned feed and livestock subsidiary, Asia’s largest in the industry, to Royal De Heus in the Netherlands for about 1.2 trillion won ($854.5 million) after two failed sale attempts.
According to sources in the investment banking industry on Tuesday, the company’s board will vote on the sale on Wednesday.
The unit up for grabs is CJ Feed&Care, which was carved out of the parent company in July 2019 for the biological resources business. The subsidiary also operates poultry and pig farms.
CJ CheilJedang first put the animal feed unit up for sale in 2019, entering talks with Dutch feed maker Nutreco N.V., but negotiations collapsed over price.
A second attempt in 2020 with the help of a global investment bank also failed to find a bidder due to tepid demand.
After back-to-back losses in 2022 and 2023, CJ Feed&Care swung to an operating profit of 74.6 billion won last year on revenue of 2.31 trillion won.
Still, CJ CheilJedang settled for a lower valuation than the nearly 2 trillion won it initially sought.
SHORING UP FINANCES
The proceeds from the sale are, however, expected to bolster CJ CheilJedang’s overall finances, stretched by a series of large acquisitions, including the acquisition of US frozen food giant Schwan’s Co., as well as deals for Brazilian animal feed producer Cerradour and German frozen food maker Mainfrost.
With CJ Feed&Care’s sluggish business, the parent CJ CheilJedang suffered a 22.4% drop in its operating profit on a consolidated basis in 2023.
In the same year, CJ CheilJedang sold its 60% stake in its Chinese food company, Jixiangju Food, for about 300 billion won as part of its restructuring.
A few months later, it sold its entire 66% stake in Brazilian soybean crusher CJ Selecta S.A., to grain products maker Bunge Alimentos S.A., US food company Bunge’s unit in the South American country, in the same year.
Founded in 1911, Royal De Heus is a family-owned company and the world’s 10th-largest animal feed maker, with operations in more than 70 countries in Europe, Asia, the Middle East, Africa and Latin America.
The Korean deal is expected to help the Dutch buyer expand its footprint in Asia by tapping CJ Feed&Care’s extensive regional network, the largest in the continent’s animal feed industry.
By Jun-Ho Cha
chacha@hankyung.com
Sookyung Seo edited this article.
