[비즈한국] CJ CheilJedang097950 is pushing for the sale of its feed subsidiary, CJ Feed&Care. According to the M&A industry, CJ CheilJedang has recently been in concrete discussions regarding the sale of CJ Feed&Care with a European feed company. CJ Feed&Care was established in 2019 through the physical spin-off of CJ CheilJedang's bio-resource business division. Between 2019 and 2020, the company held sale negotiations with Nutreco, a global feed manufacturer headquartered in the Netherlands, but the deal fell through due to differences in price.
Previous Sale Attempt in 2019 Fell Through
CJ Feed&Care operates feed, livestock, and fresh meat businesses, focusing on the domestic, Chinese, and Southeast Asian markets. According to electronic disclosures, although CJ Feed&Care recorded an operating loss in 2020 based on operating profit, it has consistently generated annual revenues of 400 to 500 billion won and operating profits of around 5 billion won from 2021 to last year. Revenue in 2023 was 551.8 billion won (with an operating profit of 3.17 billion won), and revenue in 2024 was 518.6 billion won (with an operating profit of 7.43 billion won).
This revenue is based solely on the domestic market, but when including sales generated in overseas markets, the figure rises to around 2 trillion won. This is the background behind the renewed push for a sale, following the failed attempt in 2019–2020.
According to M&A industry sources, CJ CheilJedang has reached out to overseas feed-related companies to sell CJ Feed&Care, and specific negotiations are currently underway, including due diligence for asset valuation with a European feed company interested in the acquisition.
An M&A industry insider hinted, "CJ has been shedding non-core businesses for several years. Feed&Care has always been at the top of the priority list for divestment because its revenue growth is not significant compared to how much it is affected by international conditions," adding, "Talks with the European feed company have been quite concrete, and I understand it’s at a stage where only the transaction price needs to be adjusted."
The strength of CJ Feed&Care lies in the fact that it conducts business not only in Korea but also in seven other countries, primarily in Southeast Asia such as Indonesia and Cambodia. Because of this, the Dutch feed company Nutreco attempted to acquire it in 2019, but the deal eventually collapsed because of the gap between CJ’s asking price (2 trillion won) and the amount Nutreco was willing to pay.
Up until May of this year, CJ CheilJedang had stated through disclosures that "we are reviewing various strategic options for CJ Feed&Care, but nothing specific has been decided yet." However, market analysts suggest that CJ is putting effort into this sale under the judgment that "now is the best time to sell while performance has improved."
When compared to industry peers such as Harim Group's Farmsco036580, Easy Holdings' Farmstory027710, and Woosung Feed006980, it is reported that CJ CheilJedang is hoping for a sale price of around 1 trillion won for Feed&Care. Securities firms suggest that if the sale is successful, the proceeds might be used as "ammunition" for M&As in the food business.
Will the Ground for Domestic Companies Narrow Further?
Within the livestock industry, concerns are rising over the fact that another one of the few remaining domestic feed companies, CJ Feed&Care, could be sold overseas. For the past decade since 2010, the self-sufficiency rate for mixed grain feed (corn, soybeans, etc.) has been stagnant at the 20% level, and with a 2020 self-sufficiency rate of only 25%, the country relies heavily on overseas imports for the absolute volume. In particular, dependency on foreign sources for feed, which is essential for livestock farming, is high.
Critics point out that there is too little interest in the "feed industry" in terms of food security. In fact, when global grain prices nearly doubled during the Russia-Ukraine war, it led to a rise in feed costs, increasing the burden on livestock farmers and consumers.
Although international prices for major grains like barley, corn, and wheat have recently shown overall stability, critics argue that the sale of CJ Feed&Care to an overseas entity should not be viewed simply as a "large conglomerate clearing out a non-core affiliate," given that volatility could expand at any time.
An official from the livestock industry expressed regret, saying, "The fact that they built strong infrastructure overseas is both the strength and appeal of CJ Feed&Care. While European livestock companies likely showed interest because they highly value that aspect, from our perspective, it means we are losing that much market infrastructure established abroad."