CJ CheilJedang to divest animal feed unit for W1tr

CJ CheilJedang headquarters in central Seoul (CJ CheilJedang)

South Korean food giant CJ CheilJedang said Wednesday it will sell its animal feed and livestock unit, CJ Feed&Care, to a Dutch firm for about 1 trillion won ($712 million), in a move to shed noncore businesses and streamline its portfolio.

In a regulatory filing, the company disclosed it had signed a share purchase agreement to transfer its entire stake in CJ Feed&Care to Royal De Heus, a family-owned Dutch company specializing in animal nutrition.

The divestment is expected to provide CJ CheilJedang with a major cash infusion to strengthen its balance sheet and fund new growth investments, according to the company. For Royal De Heus, one of the world’s largest feed producers, the deal would secure a broad livestock and feed production network in Asia.

“This sale is about sharpening our focus on high-growth core businesses,” an official from CJ CheilJedang said. “We also anticipate improvements to our financial structure.”

CJ CheilJedang had attempted to divest the unit twice before. A 2019 attempt to sell to Dutch feed producer Nutreco collapsed over price disagreements, while another effort in 2020 with a global investment bank failed amid a lack of buyers.

The unit has struggled in recent years with volatile grain prices and weak livestock demand. After posting an operating profit of 150.6 billion won in 2021, profit plunged to 7.7 billion won in 2022 before sliding into the red in 2023.

The business rebounded last year, posting revenue of 2.31 trillion won and swinging back to an operating profit of 74.7 billion won.

CJ Feed&Care traces its roots to 1973, when it began producing feed products, before being carved out as an independent unit in 2019. The company operates 27 feed mills across seven Asian countries, producing compound feed, livestock products and fresh meat.