North Asia-focused private equity firm MBK Partners and two leading Chinese biotechnology firms are vying for the management control of CJ Cheiljedang Corp.’s bio business in what would be the largest M&A deal in South Korea this year.
According to investment banking industry sources on Thursday, MBK and China’s two biotech firms – Guangxin Group and Meihua Group – are in the final competition stage, conducting due diligence on CJ’s bio business.
CJ CheilJedang, Korea’s largest food and beverage company, and its sale manager Morgan Stanley plan to finalize the main bidding process as early as next week, sources said.
China’s Guangxin and Meihua produce food additives such as MSG and nucleotides, as well as feed additives such as lysine and tryptophan, similar to CJ CheilJedang’s bio division.
Guangxin Group is a Chinese state-owned enterprise with an annual revenue of 51 trillion ($35 billion).
Meihua Group, another major player in China’s green bio sector, posted 3.58 trillion won in revenue in the third quarter of 2024.
ATTRACTIVE ASSET
CJ’s bio business is an attractive asset, given its strong global presence and stable earnings.
The company’s production and sales network spans 11 countries, including the US, China, Indonesia and Brazil. It also boasts a large market share in China, the world’s biggest consumer of feed amino acids.
CJ is the world’s No. 1 player in amino acids, which account for 90% of its bio business sales. Feed amino acids were the driving force in the company’s ascent of the global food and beverage market.
In 2024, the company’s bio business posted 337.6 billion won in operating profit on sales of 4.21 trillion won, up 20% and 31% from the previous year.
The business’s 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) are some 700 billion won.
Based on its EBITDA, the value of CJ’s bio business is estimated at 6 trillion won ($4.1 billion), sources said.
GROUPWIDE RESTRUCTURING
CJ Cheiljedang, the flagship unit of Korea’s food-to-entertainment conglomerate CJ Group, has put up its bio business for sale in line with the parent group’s restructuring efforts to revive sagging sales at its two growth pillars: food and entertainment.
CJ ENM Co. is Korea’s top entertainment company.
CJ CheilJedang put its bio business up for sale last December, initially attracting interest from buyout firms, including Blackstone, Carlyle Group and MBK Partners.
In 2021, CJ Cheiljedang acquired Batavia Biosciences B.V., a Dutch biotechnology company, for 195.3 million euros to expand its presence in the contract biopharmaceutical production market, known as CDMO.
By Jun-Ho Cha
chacha@hankyung.com
In-Soo Nam edited this article.
