[Exclusive] MBK Does Not Participate in CJ CheilJedang Bio Business Unit Bidding

Ultimately Did Not Participate in Final Bid Closed the Previous Day
"Industry Fluctuations and Low Technical Moat"

MBK Partners, a leading candidate in the bid for the sale of CJ CheilJedang's Green Bio division, ultimately withdrew. It appears they judged the expected acquisition price to be too high.

According to the investment banking (IB) industry on the 13th, MBK Partners did not participate in the final bid for the sale of CJ CheilJedang's Green Bio division, which closed the previous day. Although they have sufficient funds, they considered the expected price too high. In the early stages when the bidding news was announced, foreign private equity firms such as Blackstone, Carlyle, Kohlberg Kravis Roberts (KKR), and Texas Pacific Group (TPG) were also mentioned as potential buyers, but in the end, all of them withdrew, leaving only two bidders: China's Guangxin Group and Meihua Group.

The bio division of CJ CheilJedang centers on the Green Bio business, which produces food seasoning materials and feed amino acids using microorganisms as raw materials. In 1988, they established a production base in Indonesia and entered the feed amino acid market. Their market share for feed amino acid products such as lysine and tryptophan is the highest in the world. As of last year, they recorded sales of 4.2095 trillion KRW and operating profit of 337.6 billion KRW. Their EBITDA is also estimated to have exceeded 700 billion KRW. Considering this, the expected sale price was mentioned to be around 6 trillion KRW.

However, major private equity firms judged this price to be too expensive. Since it is a cyclical industry, last year's performance might reflect a boom period. In fact, CJ CheilJedang's bio division EBITDA fluctuated, recording 682.8 billion KRW in 2021, 895.9 billion KRW in 2023, 525.9 billion KRW in 2023, and 616.6 billion KRW in 2024. It is evaluated that these fluctuations were largely influenced by the volume offensive of Chinese products and raw material price changes. EBITDA is an indicator used as a benchmark for company valuation in mergers and acquisitions (M&A).

An IB industry insider explained, "Because it is a cyclical business, there is concern that entering at this price now could mean buying at the peak," adding, "The technical moat is not high, and since they have to compete on price with China, it seems they approached the bid cautiously."

Since the sale was promoted as part of CJ Group's need for business restructuring and cash securing, a successful sale is necessary, but the situation is sluggish from the start. Although other buyers may appear after the final bid, it is expected to be difficult to ignite a price competition.

Another IB industry insider said, "Unlike government procurement projects that proceed on a fixed schedule, the final bid deadline can be extended indefinitely, and other private equity firms still have room to participate later," adding, "However, since this is a deal where CJ Group has a strong intention to sell, it will not be easy to stimulate bidding by raising the price."