CJ CheilJedang Corp., South Korea’s largest food company, has cancelled the sale of a 66% stake in Brazilian soybean crusher CJ Selecta S.A. after more than a year of negotiations with US grain trader Bunge Ltd.
They had been in exclusive talks with Bunge, since signing a share purchase agreement for CJ Selecta in October 2023. The deal was estimated at 480 billion won ($335 million).
“As the likelihood of fulfilling the transaction’s preconditions is unclear, we have notified the counterparty of the contract termination,” CJ said in a regulatory filing on April 25.
CJ Selecta is the world’s largest producer of soy protein concentrate (SPC), a key ingredient in feedstuff and health foods. It raked in 714 billion won in revenue last year.
Though considered a cash cow, CJ CheilJedang had decided to unload the unit generating a steady stream of profits to streamline business.
While their negotiations dragged on, market conditions have turned favorable for CJ, with global soybean prices recovering.
Additionally, the European Union’s Regulation on Deforestation-free Products, set to take effect later this year, are expected to benefit CJ Selecta, which sources soybeans from non-deforested areas.
Under the regulations, products sold in the EU should not be sourced from deforested land, or contribute to forest degradation.
Growing demand for salmon adds the upbeat outlook for CJ Selecta. SPC accounts for up to 20% of the ingredients in salmon feed.
The improved financial health of CJ CheilJedang has strengthened its negotiating position, said investment bankers.
Its consolidated debt-to-equity ratio fell to 146% in 2024 from 151% a year earlier.
By Jun-Ho Cha
chacha@hankyung.com
Yeonhee Kim edited this article.
