April 20, 2024

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CJ CheilJedang’s decision to lower its stake in Schwan’s will be favorable, said Korea Investment and Securities on Feb. 26 maintaining a “buy” recommendation and 410,000 won (US$366.46) target price. 

It has decided to acquire 70 percent stake in the US frozen food maker, instead of initially planned 80 percent. This will bring down the acquisition amount by 200 billion won to 1.32 trillion won. The decrease will promote returns and ultimately further boost its earnings per share, estimated analyst Lee Gyeong-ju. 

There is a possibility that its capital expenditure will slightly grow after the acquisition and as CJ is financing almost half of the investment through issuing corporate bonds, reducing the stake will raise the investment effect, said the analyst. 

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