Korean conglomerate CJ Group has made a winning $1.8 billion bid for a controlling 37.6 per centstake in Korea Express, the country’s leading parcels and logistics operator, and could merge its
own smaller parcels firm to create a major new Korean CEP operator.CJ Group, which manufactures products ranging from food to entertainment, topped a lowerjoint bid from steelmaker Posco and the Samsung Group, which had been seen by analysts as thefavourite to take over Korea Express, international news agencies reported today. The CJ Group bidabout 2 trillion won ($1.8 billion), which was about 200 million won higher than the Posco-Samsungbid, according to the agency reports. Another bidder, the Lotte Group, dropped out before the finalround of bidding.
The CJ Group announced that it aimed to make Korea Express into “Asia’s leading logisticscompany”. It denied that it had over-paid for the stake and stressed it could finance the deal byselling non-core assets, the JoongAng Daily reported.
The Korea Development Bank (KDB), which handled the sale, announced that the two major KoreaExpress shareholders, Asiana Airlines and Daewoo Engineering & Construction, would next monthsign a preliminary agreement to sell a 37.6 per cent stake to the CJ Group. KDB is the main AsianaAirlines creditor and controls Daewoo Engineering. The two companies’ former parent, Kumho Asiana,had bought a 60 per cent stake in Korea Express for an estimated $4 billion in 2008. KDB forced thesale of their Korea Express stake to recoup some of its debts.
The final bids were reportedly preceded by a dispute between CJ Group and Samsung, whichjoined Posco in a joint offer late in the drawn-out bidding process. Before that, a subsidiary,Samsung Securities, had been advising CJ Group on its offer for Korea Express. CJ Group heavilycriticised Samsung’s heavily, claiming the advisers had inside knowledge of its planned bid. CJGroup was split off from Samsung in 1994 and relationships between the two groups have reportedlybeen strained since then.
Assuming that the sale of the Korea Express stake goes ahead without any disruption, it couldpave the way for a major shake-up in the country’s express parcels sector. Any merger of KoreaExpress and CJ GLS would create a dominant domestic parcels operator with a growing presence inAsia and beyond.
Korea Express, founded in 1930, has a nationwide parcels network of 60 depots, 300 deliverycentres, 10,000 parcel delivery points and about 4,500 delivery vans, along with a freighttransport fleet of some 5,000 trucks and freight terminals at the country’s main ports. In 2010 thecompany had sales of 2.1 trillion won ($1.9 billion), up from 1.8 trillion won in 2009, andincreased its operating profit to 99 billion won. Net profits went up tenfold to 68 billion won.Company president Won-Tae Lee has declared he aims for revenues of five trillion won and operatingprofit of 400 billion won by 2015.
The CJ Group’s businesses include food, bio-pharma, entertainment and home shopping. Itsparcels operator CJ GLS was set up in 1998 and grew to sales of 1.4 trillion won ($1.3 billion)within 13 years. The company, which also offers freight and logistics services, has a parcelsnetwork of 80 depots and 5,000 delivery staff. It has expanded internationally in various countriesand currently has 25 branches in 12 countries. This year it has set up a subsidiary in India tooffer door-to-door deliveries, created a network covering Indonesia and expanded its logisticscentre in Bangkok to expand activities in Thailand.
