Blackstone, Carlyle, MBK vying for CJ CheilJedang’s bio business

The division has a production and sales network spanning 11 countries and generates stable earnings

CJ CheilJedang's headquarters in Seoul (Courtesy of Yonhap)

Jong-Kwan Park and Jun-Ho Cha 2

2024-12-02 15:54:54 pjk@hankyung.com

Mergers & Acquisitions

Blackstone, Carlyle Group and MBK Partners have joined the race to purchase the bio business of CJ CheilJedang Corp., the world’s largest producer of feed amino acids, according to people familiar with the matter.

Some four to five private equity groups, including the three buyout firms, will carry out due diligence on the bio division of South Korea's largest food maker, worth around 6 trillion won ($4.3 billion).

They are expected to hand in bids at the end of this month, the sources told Market Insight, The Korea Economic Daily’s capital market news outlet, last week.

CJ’s bio business is an attractive asset rarely up for grabs in Korea thanks to its strong global presence and stable earnings, said investment bankers. It is poised to become the country's largest M&A deal this year.

The company's production and sales network spans 11 countries, including the US, China, Indonesia and Brazil. It also boasts a large market share in China, the world’s biggest consumer of feed amino acids.

CJ is the No. 1 market player in amino acids such as lysine and tryptophan used in animal feed, which account for 90% of its bio business. They are also used in microbial food ingredients.

Feed amino acids were the driving force in the company’s ascent of the global food and beverage market.

In 2024, its bio business is forecast to rake in more than 4 billion won in revenue, with earnings before interest, tax, depreciation and amortization (EBITDA) of about 700 billion won. The estimated price for the bio division amounts to about 10 times its EBITDA.

A bird's-eye view of CJ CheilJedang's food plant in Beaumont, California

Unlike its German and Japanese peers that have ceded to lower-priced Chinese rivals, CJ CheilJedang has solidified its position in the feed amino acids market. It is one of CJ CheilJedang’s mainstays alongside the food business.

But the company decided to jettison the profit-making unit in line with its parent CJ Group’s restructuring efforts to revive sagging sales at its two growth pillars: food and entertainment.

It plans to use the proceeds from the bio business sale to buy a company in pursuit of global expansion.

Morgan Stanley is managing the sale.

Meanwhile, the flagship unit of the food-to-entertainment conglomerate put its loss-making arm CJ Feed&Care on the market earlier this year.

Write to Jong-Kwan Park and Jun-Ho Cha at pjk@hankyung.com

Yeonhee Kim edited this article.