CJ Cheiljedang sells 60% take in Chinese subsidiary for $236M

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CJ Cheiljedang sells 60% take in Chinese subsidiary for $236M

Published: 31 Jul. 2023, 16:57 Updated: 04 Jun. 2024, 16:38

[CJ CHEILJEDANG]

CJ Cheiljedang sold its entire 60 percent of ownership stake in Chinese food subsidiary Sichuan Jixiangju Food for 300 billion won ($235.5 million).

The shares were acquired by multiple Chinese institutional investors and the current second-largest shareholder of Sichuan Jixiangju Food, according to CJ Cheiljedang on Monday.

The decision also shows shaky financial conditions for CJ Group, as its main affiliates like CGV, a multiplex cinema chain, suffer a decline in profit.

CJ Cheiljedang had initially bought a 60 percent stake in the Chinese pickled food maker via two separate transactions in 2011 and 2016 totaling around 38.5 billion won. Sichuan Jixiangju Food produces Chinese-style side dishes like zhaciai (pickled mustard) and various sauces. It reported revenue of 209.1 billion won in 2022.

Along with Sichuan Jixiangu Food, CJ Cheiljedang has been operating its Chinese food businesses through CJ Qingdao Foods, responsible for producing Bibigo's frozen food products and Dasida, a seasoning product developed by CJ.

"Through a 'select and concentration' approach, we plan to strategically focus on expanding our Korean food business in China while also bolstering our financial stability," the Korean food company said.

Proceeds from the sale will primarily be utilized to strengthen the company's financial stability, CJ Cheiljedang added.

CJ Cheiljedang's future plans include expanding its food business in China with a particular emphasis on promoting the globally recognized Bibigo brand in the Chinese market. It also intends to strengthen its global strategic products (GSP) businesses, which involve gim (seaweed), mandu (dumplings) and sauces, while also focusing on enhancing its online sales channels. CJ Cheiljedang raised 165 billion won in sales with the GSPs in China last year, up 33 percent from a year earlier.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]