Industry insiders are busy speculating which company will pick up CJ Healthcare following its reported decision to sell the company last week, with many citing Boehringer Ingelheim, Baxter, and Boryung as the top contenders.
CJ Healthcare, a division of Korean conglomerate CJ Group, has reportedly told its executives and employees last week that the company will be up for sale, putting the unit worth around $900 million up for grabs after 34 years in the industry.
The news came as a surprise to both industry insiders and company employees, who reportedly said they “couldn’t believe the announcement.”
|Source: CJ Healthcare|
People familiar with the issue named multinational pharma giant Boehringer Ingelheim as the top potential bidder. Other companies interested in CJ Healthcare include Baxter International, Boryung Pharm, and several private equity firms.
CJ Healthcare is the 10th-largest Korean pharmaceutical company regarding annual sales last year. The healthcare business includes some of the country’s most famous hangover drinks. Most of its sales come from functional health foods and generic drugs sold in Korea.
Market watchers speculate the move was foreshadowed by an announcement made by CJ Group Chairman Lee Jae-hyun earlier this year, who said the company would aggressively pursue profitable units such as entertainment and food while divesting peripheral units.
CJ CGV, its movie theatre franchise, recorded sales of around $1.28 billion in 2016 while CJ Healthcare’s turnover remained at $466 million in the same period, showing a wide sales gap of about $800 million.
The CJ Group also had previously tried and failed to list the healthcare unit because of unfavorable market conditions. Others also noted CJ Healthcare had suffered from a tainted public image, after a probe from local health authorities regarding claims of illegal rebates.
Local reports say CJ Group named investment bank Morgan Stanley as the overseer of the business unit sale, which will send out bid invitations this week.
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