South Korea’s food and bio company CJ CheilJedang is said to sell its feed and livestock subsidiary CJ Feed & Care to Dutch feed company Royal De Heus. The sale price is around USD 852.27 million, as reported by Maeil Business Newspaper.
According to insiders in the investment bank industry, CJ CheilJedang is expected to hold a board meeting on October 1 and propose a plan to sell its 100% stake in CJ Feed & Care to De Heus.
CJ Feed & Care was established in 2019 by the physical division of CJ CheilJedang’s biological resource business division. Based in South Korea, it is operating feed, livestock, and fresh meat businesses in Southeast Asia, including Vietnam, the Philippines, and Indonesia.
CJ Feed & Care recorded USD 1.64 billion in sales and USD 53 million in operating profit last year. Although sales decreased slightly compared to the previous year, it succeeded in turning into a surplus from an operating deficit of USD 61.36 million.
This is the third time that CJ Feed & Care has been sold following attempts in 2019 and 2020. It was pointed out as a risk that sales growth is not great, and performance volatility is high due to fluctuations in raw material prices or changes in livestock market demand.
In response, the sale was negotiated with Dutch animal nutrition and health company Nutreco once, but it was cancelled due to disagreements on prices.
Founded in 1911, De Heus was founded based on grain trade and milling and has expanded its scope to animal feed and nutrition businesses. The De Heus family has maintained family management.
De Heus seems to have started to acquire CJ Feed & Care with a view to expanding its business in Asia. In the first half of this year, it also acquired Voeders Huys, a famous Belgian feed company.
CJ CheilJedang has been working hard to clean up its non-core business for years. The sale is expected to reduce net deposits and improve financial structures as millions (USD) of cash flow in.