0
Home
News
Directory
E-newsletter
Magazine
Events
Data
AgReport
Subscribe
LG, CJ compete to acquire Korean agrochem firm Dongbu Farm
Sep. 23, 2015
Farm Hannong
SouthKoreaFollow
SouthKorea
CJ Cheiljedang and LG Chem are in an 800 billion won ($678 million) takeover battle for Dongbu Farm Hannong, the agrochemical business unit of the struggling Dongbu Group.
According to the Korea Development Bank and Credit Suisse, Wednesday, LG Chem, CJ Cheiljedang and several other companies submitted preliminary bids to buy Korea's largest pesticide and fertilizer producer. Dongbu Farm Hannong also engineers and produces seeds for rice and other crops.
The sale's managers plan to review those submitting the initial bids and select preliminary bidders by the end of September. A preferred bidder will be chosen in December.
Industry watchers expect the sale price to reach 800 billion won, given Dongbu Farm Hannong's stronger-than-expected performance in the first half of the year.
In the first six months, the firm's operating profit rose to a record high of 72 billion won. It accounts for 27 percent of the nation's pesticide market and 19 percent of the fertilizer and agricultural seed market, according to the company.
Dongbu Farm Hannong was put up for sale in April last year after Dongbu failed to settle debts amounting to hundreds of billions of won.
CJ Cheiljedang, headed by CEO Kim Chul-ha, said it wants to acquire the agrochemical company to create synergy with its food-making unit. Korea's largest food firm also wants to reinforce its agricultural seed research and development (R&D) capability by combining Dongbu's know-how and experience in the area.
"We submitted a preliminary bid to take over Dongbu Farm Hannong," a CJ Cheiljedang spokeswoman said. "We expect to generate a great deal of synergy if we acquire Dongbu's R&D expertise on various agricultural seeds. This will boost our corporate value."
CJ Cheiljedang set up CJ Breeding in March, expanding its reach into the agricultural seed sector.
However, CJ will have to compete with LG Chem, which also wants to acquire Dongbu Group's agrochemical unit.
"We expressed our intention to purchase Dongbu Farm Hannong by submitting a preliminary bid," an LG Chem spokesman said. "But I am not at liberty to discuss details."
LG Chem, headed by CEO Park Jin-soo, has two main areas of business: petrochemical products and batteries used in electric vehicles and energy storage systems. Now the company wants add the bio-agricultural business to its portfolio.
"The acquisition of Dongbu Farm Hannong will certainly generate synergy with LG Chem's petrochemical business," an industry analyst said. "This is also expected to boost the business of the firm's affiliate LG Life Sciences, which produces raw materials for various pesticides. LG Group will then be in a better position to compete with BASF and other global chemical companies."
Source: Korea Times
More from AgroNews
Change
Hot TopicSubscribe
| Subscribe Email: | * | |
| Name: | ||
| Mobile Number: | ||
Comment
0/1200
NEWSLETTER