The largest two Korean express parcel and logistics companies, CJ Korea Express and CJ GLS, areto merge into a single $3.5 billion turnover company that will dominate the local market as the
logistics subsidiary of an expanding consumer products conglomerate and could step up expansion inAsia and around the world.CJ Korea Express announced today that it plans to merge with sister company CJ GLS through ashare swap. The larger company, CJ Korea Express, would absorb CJ GLS and remain listed inthe Korea Stock Exchange. The merger requires approval at a February 28 shareholder meeting andwould go into effect on April 1, 2013.
CJ Korea Express said that the merger of the two subsidiaries of food and entertainmentconglomerate CJ Group was designed “to improve its competitive edge in local and overseas markets”. It also underlines the logistics growth ambitions of the CJ Group which has established ‘retailing & logistics’ as one of its core business areas alongside food, bio & pharma andentertainment & media.
After gradually building up its parcels delivery company CJ GLS in recent years, CJ Group made amajor expansion move into the logistics sector in July 2011 with the acquisition of a controlling40% stake in Korea Express, the country’s largest express delivery and logistics provider, forabout US$1.7 billion and later rebranded it as CJ Korea Express.
CJ Korea Express had sales of 2.24 trillion won ($2.1 billion) in 2011 from domestic parcel andlogistics services as well as international freight forwarding. Internationally it has operationsacross Asia, Europe, North America and other parts of the world. Last year it bid for US freightforwarder Phoenix International but pulled out due to differences over terms.
CJ GLS had an operating profit margin of 2.6% on revenues of 1.54 billion won ($1.45 billion) in2011, with logistics generating 71% of its revenues and parcel delivery 29%. It has expanded itsinternational activities rapidly in recent years and now has subsidiaries in 12 countries, offeringmostly freight services. It also cooperates with Middle East-based Aramex and EMS China and hasother partners in the rest of the world.
