[BizHanKook] Daou Kiwoom Group is pushing for the acquisition of the JoongAng Ilbo. This has drawn attention to Mr. A, a department head at a business newspaper who is the second son-in-law of Kim Ik-rae (76), the former chairman and head of Daou Kiwoom Group. Mr. A married Kim Jin-yi (44), the second daughter of former Chairman Kim and an executive director at Kiwoom Asset Management, in 2021. As an active journalist, he is considered to have a deep understanding of the media industry. Consequently, some analysts suggest that if Daou Kiwoom Group acquires the JoongAng Ilbo, Mr. A and executive director Kim Jin-yi could potentially take on management roles.
Daou Kiwoom Group is pursuing the acquisition of the JoongAng Ilbo by forming a consortium. On October 20, Daou Technology, a Daou Kiwoom Group affiliate, announced through a public filing that “the consortium formed by us (Daou Technology), our related company Saramin, and CJ Corporation, among others, has been notified by the lead manager, Samil PricewaterhouseCoopers, that it has been selected as the preferred bidder for a third-party paid-in capital increase to acquire the JoongAng Ilbo.”
The consortium includes Daou Kiwoom Group, CJ, and Shinsegae. Although the specific investment amounts of the consortium members have not been disclosed, investment banking (IB) industry sources report that Daou Kiwoom Group will be the largest shareholder, with CJ and Shinsegae becoming the second and third largest shareholders, respectively. Both CJ Group and Shinsegae Group belong to the Pan-Samsung family, as does the JoongAng Ilbo. Furthermore, CJ Group operates a media business through CJ ENM, and Shinsegae Group also has media affiliates such as Mindmark and Studio 329.
While Daou Kiwoom Group owns a content production affiliate, Kidari Studio, it does not occupy a significant portion of the group. Nor does Daou Kiwoom Group belong to the Pan-Samsung family. This has led to curiosity regarding the background behind Daou Kiwoom Group’s push for the JoongAng Ilbo acquisition.
Although not officially stated by Daou Kiwoom Group, the business community views Kim Dong-jun (42), CEO of Kiwoom Investment and eldest son of former Chairman Kim Ik-rae, as the next successor to the group. The governance structure of Daou Kiwoom Group follows the path of ‘E-Money → Daou Data → Daou Technology → Kiwoom Securities.’ Shareholders of E-Money, which sits at the top of the governance structure, include CEO Kim Dong-jun (33.13%), Kim Jin-hyun (46, eldest daughter of former Chairman Kim Ik-rae) (6.02%), executive director Kim Jin-yi (6.02%), and treasury shares (54.82%). Excluding treasury shares, CEO Kim Dong-jun holds a majority of the voting shares.
However, the stakes held by Kim Jin-hyun and executive director Kim Jin-yi are not insignificant. Moreover, Kim Jin-hyun’s husband, Lee Jae-jun, an executive at Kidari Studio (45), and executive director Kim Jin-yi are currently working at Daou Kiwoom Group affiliates. For this reason, some in the business world speculate that if Daou Kiwoom Group acquires the JoongAng Ilbo, executive director Kim Jin-yi and her husband could possibly take over the management of the newspaper.
The acquisition price of the JoongAng Ilbo being discussed in the market is around 500 billion won. Given the scale of Daou Kiwoom Group, it appears that financing will be sufficiently feasible.
Lee Ju-ho, a senior researcher at Korea Ratings, analyzed, “While a short-term increase in debt burden is inevitable if funding requirements for the JoongAng Ilbo acquisition are added to the ongoing investment for the new Jukjeon CDC (Cloud Data Center) after 2025, it is expected that the company can cope based on its stable profit structure, dividend income from subsidiaries including Kiwoom Securities—which has recently been increasing its dividend payout ratio—and excellent financial flexibility based on the value of assets held, including shares in Kiwoom Securities.”
The reason for Daou Kiwoom Group forming a consortium with CJ and Shinsegae is interpreted to be not only for financing but also to comply with shareholding restrictions under current law. The ‘Act on the Promotion of Newspapers, etc. (Newspaper Act)’ stipulates that “large corporations and their affiliates cannot acquire or own more than 50% of the shares or stakes issued by a corporation that manages a general daily newspaper.” Therefore, Daou Kiwoom Group, as a large corporation, is restricted from independently owning more than 50% of the JoongAng Ilbo’s shares.
The variable is the internal sentiment at the JoongAng Ilbo. The JoongAng Ilbo labor union is demanding that potential buyers prohibit the dual holding of management and editorial positions, guarantee the independence of editorial rights, and strengthen journalism capabilities. If Daou Kiwoom Group accepts the JoongAng Ilbo labor union’s demands as they are, the management’s influence on the editorial sector may be limited.
Daou Kiwoom Group is not issuing any official statement regarding the JoongAng Ilbo acquisition other than what has been disclosed in public filings. The business community’s attention is focused on whether Daou Kiwoom Group will accept the demands of the JoongAng Ilbo union to complete the acquisition, and further, whether executive director Kim Jin-yi and her husband will participate in the management of the JoongAng Ilbo.