CJ Group to proceed with sale of bio business

CJ Group is moving forward with the sale of its bio division, which is the world's No. 1 in the green bio field. According to industry sources, CJ CheilJedang (097950) is in the process of selling the bio division on the 18th.
Morgan Stanley has been selected as the lead manager and is in contact with potential buyers. The official bidding could take place as early as next month. The sale price is estimated to be in the 6 trillion won (US$6.42 billion) range.
CJ CheilJedang's bio business, along with its sugar business, is one of the core businesses that have helped the company grow into a global food and beverage company.
Due to the shortage of amino acids, prices have risen sharply, and sales, which were 2.9817 trillion won (US$3.2 billion) in 2020, are expected to surge to 4.854 trillion won (US$5.376 billion) in 2022.
A source in the food industry said, "Talks of CJ liquidating its bio business have been going around for the past three or four years. With sales of 4 trillion won (US$4.3 billion) and a net loss of 200 billion won (US$2.2 billion),
"The fact that they are selling a business that has recorded operating profits of over JPY 200 million suggests that they have concluded that the bio business does not have much potential for future growth."
In addition, it is also believed that the fact that the green bio industry's performance fluctuates greatly over a 3-5 year cycle depending on the market conditions of raw materials and meat consumption demand also played a role.
The industry is predicting that CJ CheilJedang will use the proceeds from the sale of its bio business to participate in a mega-merge and acquisition deal. CJ CheilJedang acquired its health and functional food division in 2018.
It sold CJ Healthcare to Korea's Kolmar for 1.3 trillion won (US$1.4 billion). It then acquired Schwan's Company, the second largest frozen food company in the US, for 2.1 trillion won (US$2.3 billion).
With the acquisition, the company's U.S. sales increased more than tenfold from 362.9 billion won (US$357 million) to 4.38 trillion won (US$4.8 billion) last year.