CJ CheilJedang is pushing to sell about USD 153 million worth of non-core assets, as reported by Seoul Economic Daily.
The assets classified for sale are real estate properties located across the country, including its Incheon No. 3 plant.
The industry expects a sale-and-leaseback arrangement to be the most likely option. The cash secured through liquidating non-core assets is expected to be used to restructure the company’s business and strengthen new growth engines.
The assets
According to the investment banking (IB) industry recently, CJ CheilJedang has classified owned real estate for sale, including its Incheon No. 3 plant and Incheon frozen food plant in Jemulpo-gu, Incheon, and its Nonsan No. 3 plant in South Chungcheong Province, and is searching for buyers.
According to its business report, CJ CheilJedang operates 15 plants nationwide. Among them, the Incheon No. 3 plant handles cooking oil production, while the Incheon frozen food plant produces frozen foods such as dumplings.
Both production facilities are located near Pier 5 of Incheon Port, allowing them to be used as export and import hubs. The combined value of the assets currently on the market is said to be around USD 153 million.
CJ CheilJedang ranks among the leaders in South Korea’s domestic cooking oil market alongside Sajo Group and Ottogi. Because it imports soybeans and extracts oil directly, it must operate production facilities near large ports.
In frozen foods, growth continues overseas centered on the dumpling brand ‘Bibigo’, so expansion rather than facility reduction is needed.
“Various real estate properties, including production facilities, buildings, and land, are on the market,” an IB industry official said.
“Among them, for the production facilities, a sale-and-leaseback method — selling the real estate on the condition of leasing it back — is most likely.”
Business rebalancing
The large-scale asset sale is interpreted as a move in the direction of business rebalancing.
In March this year, CJ CheilJedang announced measures to restructure its business and improve its fundamentals, establishing the Future Innovation Office directly under the CEO.
The Future Innovation Office is leading rebalancing work, including optimizing the business portfolio through the liquidation of non-core assets and improving fundamentals centered on profit and growth businesses.
CJ CheilJedang also carried out a large-scale organizational overhaul, restructuring its business structure — previously divided into food and bio — into three divisions: lifestyle food, technology materials, and core materials.
Strengthening ‘cash cows’
The cash secured by selling non-core assets is expected to be used to strengthen ‘cash cows’ such as the Bibigo brand and new growth engines such as bio materials.
CJ CheilJedang’s food business, led by the Bibigo brand, saw overseas sales (around USD 3.9 billion) exceed domestic sales (around USD 3.7 billion) for the first time last year.
Nucleic acid, a high-value-added product in the bio division, has recently entered a full-fledged growth phase by securing new clients.
“CJ CheilJedang’s existing core businesses, such as flour milling and sugar refining, are seeing their profitability worsen due to the effects of high exchange rates and high oil prices,” a food industry official said.
“As K-food has recently settled into the US market, the company will increase investment in core growth businesses with the funds secured by selling non-core real estate.”
Meanwhile, a CJ CheilJedang official said, “As part of future innovation, we are considering various measures for asset efficiency, but nothing has been specifically confirmed.”