SEOUL, Nov. 3 (Korea Bizwire) – Foods-to-entertainment conglomerate CJ Group said Friday it decided to sell off its 34-year-old pharmaceutical affiliate CJ Healthcare due to the limitations of its domestic business.
Morgan Stanley has been named the underwriter for the sale that industry watchers expect to exceed 1 trillion won (US$898.87 million), the affiliate’s estimated market cap when it sought stock market listing early last year. The flotation was postponed at the time due to unfavorable market conditions.
CJ officials said no specific sale discussions are in progress and that the company is open to all possibilities. The underwriter is due to provide corporate information next week to key investors.
CJ Cheiljedang, the foods business of the group, had launched the pharmaceutical affiliate in 1984 through acquisitions of local companies. CJ Healthcare was split off in 2014. The company, which mainly produced generic drugs, logged 520.8 billion won in sales last year with operational profit of 67.9 billion won and net profit of 46.9 billion won.
“CJ Group has been in the pharmaceutical business for 34 years, but the domestic market has its limitations, and the industry is in need of restructuring,” a corporate watcher said. “CJ likely concluded that if it cannot develop the business to its best, then it’s better to sell it and focus on other businesses instead.”