Blackstone, Carlyle Group and MBK Partners have joined the race to purchase the bio business of CJ CheilJedang Corp., the world’s largest producer of feed amino acids, according to people familiar with the matter.
Some four to five private equity groups, including the three buyout firms, will carry out due diligence on the bio division, worth an estimated 6 trillion won ($4.3 billion), of the largest food maker in South Korea.
They are expected to hand in bids around the end of this month, the sources told Market Insight, The Korea Economic Daily’s capital market news outlet, last week.
CJ’s bio business is an attractive asset rarely up for grabs recently in South Korea thanks to its strong global presence and stable earnings, said investment bankers. It is poised to become South Korea’s largest M&A deal this year.
The company has production and sales network in 11 countries, including the US, China, Indonesia and Brazil. Particularly, it boasts of a high market share in China, the world’s largest consumer of feed amino acids.
CJ is the No. 1 market player in amino acids such as lysine and tryptophan used in animal feed, which accounts for 90% of its bio business. They are also used in microbial food ingredients.
It was a driving force for the company’s ascent in the global food and beverage market.
In 2024, its bio business is forecast to rake in over 4 billion won in revenue, with earnings before interest, tax, depreciation and amortization (EBITDA) of about 700 billion won. The estimated price for the bio division amounts to about 10 times its EBITDA.
Unlike German and Japanese peers that have ceded to lower-priced Chinese rivals, CJ CheilJedang has solidified its position in the feed amino acids market. It is one of CJ CheilJedang’s mainstays alongside the food business.
But the company decided to jettison the profit-making arm in line with its parent CJ Group’s restructuring efforts to revive sagging sales at its two growth pillars: food and entertainment.
It plans to use the proceeds from the bio business sale to buy a company as part of its pursuit of global expansion.
Morgan Stanley is managing the sale.
Meanwhile, the flagshp unit of the food-to-entertainment conglomerate has put its loss-making arm CJ Feed&Care on the market earlier this year.
By Jong-Kwan Park and Jun-Ho Cha
pjk@hankyung.com
Yeonhee Kim edited this article.
