Shinsegae joins Daou Kiwoom-CJ consortium chosen to buy Joongang Ilbo
In short
Shinsegae Inc (㈜신세계) is joining the Daou Kiwoom-CJ consortium, which was named preferred bidder for Joongang Ilbo (중앙일보), outlets reported on 20 October. The price is reported at around 500 billion won, paid through a third-party allotment capital increase. The stake split inside the consortium has not been officially confirmed.
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Shinsegae Inc (㈜신세계) is joining the Daou Kiwoom-CJ consortium that was named preferred bidder to buy Joongang Ilbo (중앙일보), Korea Economic Daily, Chosun Ilbo, Yonhap, Hankook Ilbo and Newsis reported on 20 October. According to investment-bank and industry sources, Shinsegae will take part together with CJ Group in subscribing to new Joongang Ilbo shares. [ 1 , 2 , 3 , 4 , 5 ]
The consortium was selected as preferred bidder the day before, right after the final bid closed, ahead of five other bidders including Orion and Global Sae-A (글로벌세아). Newsis said the sale adviser, Samil accounting firm (삼일회계법인), made the selection after an open competitive bid, and listed OK Financial Group among the bidders. Yonhap and Newsis reported that Daou Kiwoom Group first pursued the purchase alone and formed the consortium with CJ before the final bid. [ 1 , 2 , 3 , 4 , 5 ]
The price is around 500 billion won, and the deal is a third-party allotment capital increase, in which the buyers purchase newly issued shares. Newsis said the new money would go to improving Joongang Ilbo's financial structure. Korea Economic Daily and Newsis reported a plan to divide the consortium roughly 50% Daou Kiwoom, 30% CJ and 20% Shinsegae, although Newsis said this was not officially confirmed. Chosun Ilbo quoted a CJ-side source who said Daou Kiwoom and the Samsung-family side would split 50-50, while a Shinsegae official said the specific figures in the 30-20 report differ. [ 1 , 2 , 5 ]
Shinsegae said it would respect Joongang Ilbo's identity and expertise and plans to create synergy with its premium cultural platform and lifestyle content. CJ said it decided to take part to continue the founding spirit of its late chairman Lee Byung-chul and in view of synergies in media content, logistics and advertising, with editorial independence as its top priority. Yonhap reported that Shinsegae joins as an equity investor rather than to gain management control and is expected to be the third-largest shareholder; Newsis said how management participation will work after the purchase has not been decided. [ 2 , 3 , 4 , 5 ]
Joongang Ilbo was founded in 1965 by Samsung founder Lee Byung-chul. CJ Group chairman Lee Jae-hyun is his grandson and Shinsegae chairwoman Chung Yu-kyung (정유경) is his maternal granddaughter. Shinsegae Inc is the side of the group led by Chung Yu-kyung, which includes Shinsegae Department Store, Shinsegae DF and Shinsegae International, and operates separately from the E-mart side led by Chung Yong-jin. CJ already holds 9.24% of Joongang Ilbo through CJ Olive Networks (CJ올리브네트웍스). [ 2 , 3 , 4 , 5 ]
Chosun Ilbo said Joongang Ilbo separated from Samsung Group in 1999, was led by the family of Hong Seok-hyun and went through a workout, and now returns to the Samsung-family fold after 27 years. Chosun Ilbo also noted a view that the family did not want to hand the founder's newspaper wholly to outsiders. The consortium is to sign a conditional share subscription agreement, then go through the creditors' council, a bondholders' meeting, Joongang Ilbo's board and payment of the funds. Creditors plan to finish the purchase within the year so that the company exits its workout. [ 2 ]
Why it matters
CJ and Shinsegae, run by a grandson and a maternal granddaughter of Samsung founder Lee Byung-chul, would both be among the buyers of the newspaper he founded in 1965. Outlets say creditors aim to finish the deal within the year so that Joongang Ilbo can exit its workout.
Key facts
- Shinsegae Inc (㈜신세계) is joining the Daou Kiwoom-CJ consortium, which was selected as preferred bidder for Joongang Ilbo, and will take part in subscribing to new Joongang Ilbo shares. [ 1 , 2 , 3 , 4 , 5 ]
- The consortium was selected the day before, right after the final bid closed, ahead of five other bidders including Orion and Global Sae-A (글로벌세아). [ 1 , 2 , 4 ]
- The price is around 500 billion won, structured as a third-party allotment capital increase in which new funds go into Joongang Ilbo. [ 1 , 2 , 5 ]
- Newsis reported that the new investment money will go to improving the company's financial structure. [ 5 ]
- Shinsegae said it plans to create synergy with its premium cultural platform and lifestyle content while respecting Joongang Ilbo's identity and expertise. [ 2 , 3 , 4 , 5 ]
- Daou Kiwoom Group first pursued the purchase alone and formed the consortium with CJ Group before the final bid, according to Yonhap and Newsis. [ 3 , 5 ]
- CJ already holds 9.24% of Joongang Ilbo through CJ Olive Networks (CJ올리브네트웍스). [ 2 , 5 ]
Confirmed by several sources
- Shinsegae Inc is joining the Daou Kiwoom-CJ consortium for the Joongang Ilbo purchase; Shinsegae itself said it is taking part jointly with CJ. [ 2 , 3 , 4 , 5 ]
- The Daou Kiwoom-CJ consortium was selected as preferred bidder the day before, after the final bids closed. [ 1 , 2 , 4 , 5 ]
- The deal is a third-party allotment capital increase priced at around 500 billion won. [ 1 , 2 , 3 , 5 ]
- Joongang Ilbo was founded in 1965 by Samsung founder Lee Byung-chul; CJ chairman Lee Jae-hyun is his grandson and Shinsegae chairwoman Chung Yu-kyung (정유경) is his maternal granddaughter. [ 2 , 3 , 4 , 5 ]
Still unclear
- How the consortium's shares are split. Korea Economic Daily and Newsis reported a plan of roughly 50% Daou Kiwoom, 30% CJ and 20% Shinsegae, but Newsis said the figures are not officially confirmed. Chosun Ilbo quoted a CJ-side source saying Daou Kiwoom and the Samsung-family side would hold 50-50, and a Shinsegae official saying the specific figures in that report differ.
- Shinsegae's role and rank among shareholders. Only Yonhap reported that Shinsegae will invest for equity rather than management control and is expected to become the third-largest shareholder.
- How CJ and Shinsegae will take part in management after the acquisition. Newsis said the method of management participation has not been decided.
What local media are saying
Timeline, local time
- Korea Economic Daily reports that Shinsegae is joining the consortium. [ 1 ]
- Chosun Ilbo publishes its report, including Shinsegae's statement and the disputed stake figures. [ 2 ]
- Yonhap reports that Shinsegae is joining the consortium. [ 3 ]
- Hankook Ilbo and Newsis publish their reports. [ 4 , 5 ]