CJ Group's CJ CheilJedang will push to sell the starch sugar business unit within its core materials business. As part of divesting noncore businesses and reshaping its business structure, CJ CheilJedang recently disclosed a policy to wind down marginal businesses during a reorganization of business units. The sale price is expected to be around 300 billion won.
On the 28th, according to the investment banking (IB) industry, CJ CheilJedang(097950) sounded out a split sale of the starch sugar business unit to major domestic financial investors (FIs), including private equity fund (PEF) managers. The sale would be a carve-out by separating the unit, and a domestic accounting firm is said to be advising.
Starch sugar is a sugar product obtained by hydrolyzing starch with acid or saccharifying enzymes, and is mainly consumed as a sweetener in processed foods. CJ CheilJedang has pursued the starch sugar business in a business-to-business (B2B) format. It ranks fourth in the industry after Daesang, Sajo CPK, and Samyang Corporation.
CJ CheilJedang's move to sell the starch sugar business unit is seen as driven by an assessment of low growth and profitability. The unit's annual sales are estimated at under 100 billion won, with earnings before interest, taxes, depreciation and amortization (EBITDA) of about 30 billion won.
CJ CheilJedang recently set a policy to focus its capabilities on global K-food and high value-added materials. In early this month, it restructured its two business units—food and bio—into three (life, technology, and core materials), and also began classifying noncore units for sale.
In particular, CJ CheilJedang was investigated by the Korea Fair Trade Commission over unfair collusion related to agreements on prices for starch sugar, sugar, and flour. In the case of starch sugar, it was found to have agreed to and implemented price increases and cuts, and after an FTC decision, it was hit with a 102.9 billion won penalty surcharge.
Some expect CJ CheilJedang to review broad sales of noncore units beyond simply sounding out a sale of the starch sugar unit. There is also talk of pushing again to sell the green bio business, which was already once put up for sale last year. There were also discussions about selling Brazilian subsidiary CJ Selecta.
Regarding the move to sell the starch sugar unit, a CJ CheilJedang official said, "As part of boldly winding down marginal businesses with low growth and profitability from the perspective of future innovation, we are reviewing various options." The official added, "Nothing has been finalized specifically."