According to investment banking (IB) industry sources on the 1st, CJ CheilJedang Corp has selected Samjung KPMG as the lead underwriter and has begun preparations to sell its starch syrup division. The starch syrup business is a B2B (business-to-business) sector that produces and supplies corn syrup, glucose, and fructose using corn starch as a raw material. CJ CheilJedang Corp holds a market share in the low 10% range in the domestic starch business market, ranking fourth behind Daesang, Sajo, and Samyang Corporation. Although it generates stable revenue, it has been identified as a business with limitations requiring structural improvement due to its relatively low growth potential and profitability.
CJ CheilJedang Corp. plans to streamline its non-core assets by divesting the starch and sugar business, thereby alleviating its financial burden and focusing its capabilities on new growth engines. This move is seen as a strategic decision to enhance management efficiency amid external headwinds, such as the imposition of fines by the Fair Trade Commission. Previously, CJ CheilJedang Corp. recorded a net loss of 417 billion won last year after recognizing the fines as a provision for liabilities.
Past Deals with No Compromise on Valuation… Attention on the Results of This Breathing Space
Industry observers view the sale of the starch business as a pivotal link in the company-wide rebalancing effort. Given the coexistence of past instances where the company opted for strategic suspension rather than selling assets at bargain prices, alongside successful divestitures that improved its financial structure, this sale of the starch business is expected to determine the success or failure of the restructuring.
Last year, CJ CheilJedang Corp simultaneously pursued the sale of its bio business division and its Brazilian subsidiary, CJ Selecta, in the first half of the year but halted both transactions. At the time, CJ CheilJedang Corp cited the need to directly strengthen its business competitiveness amid uncertain market conditions, such as the prolonged U.S.-China trade conflict. However, the market pointed to the company’s failure to bridge the gap with buyers over valuation as the actual reason. Rather than rushing the sales, the company opted for a strategic pause until it could secure an appropriate valuation.
In fact, after the sales of its bio division and Selekta fell through, CJ CheilJedang Corp successfully sold CJ Feed & Care in October of the same year. Royal de Huse, a Dutch animal feed company, acquired Feed & Care for approximately 1.2 trillion won; the deal was structured as a debt-assumption transaction, with the buyer assuming 800 billion won in debt. This move was widely regarded as a successful divestiture, as it alleviated the burden of hundreds of billions of won in debt and improved the company’s financial structure.
Will this pave the way for the sale of other non-core business units?
Analysts note that, unlike the bio business unit deal—which reached the trillions of won—the starch division is smaller in scale. Furthermore, given the company’s strong push for future innovation since the beginning of the year, its determination to divest underperforming businesses is stronger than ever.
If the sale of the starch division sets the precedent, it is likely to provide momentum for the resale of other non-core assets—such as CJ Corp. Selecta—whose sales processes had stalled. On the 1st, CJ CheilJedang Corp reorganized its business structure—which had previously been divided into food and bio segments—into three divisions: △Lifestyle Foods, △Technology Materials, and △Core Materials; business units that do not fall under these categories are considered candidates for sale or divestiture.
A CJ CheilJedang Corp official explained, “As part of our efforts to boldly divest underperforming businesses with low growth potential and profitability in the interest of future innovation, we are reviewing various options,” adding, “Nothing has been finalized yet.”
