CJ CheilJedang, a South Korean food company, is preparing to sell its bio business unit valued at 6 trillion won ($4.3 billion). The Seoul-based food company has tapped Morgan Stanley as the lead advisor for the sale and has begun engaging with potential buyers, according to sources familiar with the matter on Nov. 18.
“CJ likely sees this as the right moment to divest the business as it still maintains its technological edge and sales network despite facing increasing competition from low-cost Chinese producers,” said an industry insider.
The bio business unit is divided into three segments: Red Bio focuses on pharmaceuticals and medical products, White Bio produces eco-friendly materials, and Green Bio manufactures feed additives and seasoned foods. The Green Bio segment accounts for over 90% of the division’s total sales. The potential sale will target the Green Bio segment, which analysts estimate to be worth around 6 trillion won.
CJ CheilJedang, which expanded into the bio sector during the 1997 Asian financial crisis, holds the number one global market share in feed amino acids such as lysine and tryptophan. The company plans to retain its White and Red Bio segments.
Last year, the company’s bio business unit reported sales of 4.143 trillion won and an operating profit of 251.3 billion won, accounting for 23% of its total sales and 30% of its operating profit. While the food giant’s overall sales have increased due to the global popularity of Korean products, or Hallyu (Korean Wave), CJ CheilJedang has been tightening its operations amid weaker domestic sales.
