[THE INVESTOR] Korean food giant CJ CheilJedang is seeking to acquire US food processor Schwan’s Co. for an estimated 3 trillion won (US$2.80 billion), according to industry sources on June 7.
The food business unit of CJ Group recently participated in a preliminary bid to acquire a sizeable stake in Minnesota-based Schwan’s. The firm also confirmed its bid in a regulatory fling on the day.
Schwan's, which owns the Red Baron brand is the No. 2 frozen pizza maker in the US after Nestle.
“We are considering acquiring a US food processing company as part of our business expansion overseas but nothing has been decided yet,” it said.
Even though Thailand’s Charoen Pokphand Foods also reportedly joined the bid, sources say the CJ unit is likely to win the deal largely due to the high offering price -- the largest-ever purchase by the retail group.
The latest deal comes after CJ CheilJedang secured 1.3 trillion won cash after selling off its pharmaceutical unit CJ Healthcare in April.
Established in 1952, Schwan’s is one of the largest food companies in the US and is the No. 2 player in the frozen pizza market next to Nestle. The firm employs about 11,000 people and its annual revenue and operating profit stand at about 3.24 trillion won and 280 billion won, respectively.
Industry watchers say CJ’s tie-up with the US firm could pave the way for it to diversify itsproduct portfolio and extend its retail network in the US.
“In November, the largest shareholder hinted at selling the firm and the price was estimated to reach 2.7 trillion won. Considering CJ’s 1.3 trillion won cash after the sell-off of CJ Healthcare, it could purchase at least 50 percent stake,” said Park Sang-joon, an analyst at Kiwoom Securities.
By Lee Ji-yoon (firstname.lastname@example.org)