‘Daou-CJ Consortium’ picked as preferred bidder for the sale of a controlling stake in JoongAng Ilbo [fn Market Watch]

[Financial News] Daou Kiwoom Group and CJ Group have been picked as candidates to become the new owners of JoongAng Ilbo. The two groups, which formed an alliance at the last minute, reportedly gained an edge in the acquisition battle involving six bidders by offering a purchase price of about 500 billion won.
According to investment banking (IB) industry sources on the 20th, Samil PricewaterhouseCoopers, the financial adviser overseeing the sale of JoongAng Ilbo, selected the consortium formed by Daou Kiwoom Group and CJ Group as the preferred bidder the day before. Daou Kiwoom Group had initially pursued a solo acquisition but changed course and decided to work with CJ Group ahead of the final bid.
A total of six bidders took part in the contest to acquire JoongAng Ilbo: the Daou Kiwoom-CJ consortium, Orion, Global Sae-A, OK Financial Group, E Broadcasting and Geumbo Development. IB industry sources estimate that the consortium’s offer was around 500 billion won. With many rival bidders reportedly offering between 300 billion and 400 billion won, observers say the two groups’ financial firepower proved decisive.
The creditors are understood to have placed considerable weight on price competitiveness in the acquisition process. The aim was to reduce the scope for subjective judgment during the evaluation and minimize disputes over fairness among bidders. The need to secure sufficient new funding to improve the financial structure of JoongAng Ilbo, which is undergoing a workout, is also thought to have been taken into account.
CJ Group’s entry is seen as a factor that changed the balance of the acquisition contest in its final stages. CJ Group explored the possibility of partnering with bidders other than Daou Kiwoom Group, but ultimately joined forces with Daou Kiwoom Group to pursue a joint acquisition. The two sides are thought to have strengthened their bid by combining their respective financing capabilities and business foundations.
The two groups could also put JoongAng Ilbo to use in a variety of ways in their businesses. Daou Kiwoom Group operates in finance and information technology (IT), primarily through KIWOOM Securities Co., Ltd. and Daou Technology, and has also entered the webtoon and web-novel content business through KidariStudio, Inc. CJ Group, for its part, operates in broadcasting, video and entertainment, with CJ ENM at its center. Analysts say there is room to expand their business areas by integrating JoongAng Ilbo’s news content, brand and media network into their existing businesses.
Regulations on newspaper ownership are also behind the two groups’ decision to pursue a joint acquisition. Under the current Newspaper Act, certain large business groups may not hold 50% or more of the shares in a general daily newspaper. Since both Daou Kiwoom Group and CJ Group are subject to this restriction, their joint investment structure is understood to be a way of pursuing control.
CJ Group also has an existing shareholding relationship with JoongAng Ilbo. CJ OliveNetworks holds a 9.24% stake in JoongAng Ilbo and is listed among its major shareholders, after JoongAng Holdings and Hong Seok-hyun, chairman of JoongAng Holdings. Both JoongAng Ilbo and CJ Group have historical ties to the late Lee Byung-chul, founder of Samsung.
An IB industry source said, “In effect, the outcome of this acquisition contest hinged on which bidder CJ would join forces with,” adding, “With CJ on board, Daou Kiwoom was able to spread out its financing burden and secure the capacity to outprice rival bidders.”

[email protected] Kim Hyun-jung Reporter