April 27, 2024

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[THE INVESTOR] CJ CheilJedang will benefit from taking over US frozen food processor Schwan’s, said KB Investment and Securities on Nov. 16 maintaining a “buy” recommendation and 425,000 won (US$376.04) target price. 

It has invested US$1.84 billion to acquire 80 percent in the US company which owns the second-largest market share in frozen pizza and the largest in frozen pie and frozen Asian appetizers sector in the US. CJ’s revenue from processed food in the US will hike 28.5 percent this year to 360.6 billion won, and that of frozen dumplings will top 200 billion won, estimated analyst Park Ae-ran.

The acquisition will allow CJ to further expand its product range and distribution channel in the US. Its cost will rise from financing the acquisition but considering that Schwan’s will bring in 80 billion won net profit, the deal is unlikely to undermine its earnings per share, said the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)