CJ Group Beats Out Posco-Samsung for Korea Express Stake; Stock Plunges

CJ Group, owner of South Korea’s biggest foodmaker, was named preferred bidder for a $936 million controlling stake in the nation’s biggest logistics company, beating a rival Posco-Samsung Group offer.

Korea Express Co.’s two largest shareholders, Asiana Airlines Inc. and Daewoo Engineering & Construction Co., will next month sign a preliminary agreement to sell a stake of about 40 percent, sale arranger Korea Development Bank said in an e- mailed statement today. It didn’t say how much was bid.

The Seoul-based transport company slid 15 percent on the city’s stock exchange on concerns it would get less business from CJ Group than it would have gained from Posco, South Korea’s biggest steelmaker. The bidders were vying for control of a company with terminals in South Korea’s biggest ports, 10,000 express-delivery outlets and more than 5,000 trucks.

“This is definitely a huge surprise,” said Kim Min Jeong, an analyst at KTB Securities Co. in Seoul. “It was very obvious that the best synergy would come with Posco (005490) being the owner.”

CJ Group offered about 2 trillion won ($1.85 billion), Korea Economic Daily reported, without saying how it got the information. Korea Express closed at 111,000 won, giving it a market value of $2.34 billion, according to data compiled by Bloomberg.

CJ Cheiljedang Corp. (097950), the maker of Cheiljedang sugar, and a unit of CJ Corp. will each pay for half the Korea Express stake, the group said in a regulatory filing, without giving a value for the deal.

CJ Cheiljedang fell 7.6 percent, the biggest decline since March 2009, to close at 250,000 won in Seoul trading. CJ Corp. tumbled 9.9 percent to 73,000 won.

CJ Group will use Samsung Life Insurance Co. shares and non-core assets to help fund the acquisition, it said in an e- mailed statement today, without elaboration. CJ Cheiljedang and CJ Corp. (001040) own a combined 5.5 percent in Samsung Life, South Korea’s biggest life insurer.

The group’s other investments include a TV shopping network, an animal-feed maker, a cinema chain and Korean outlets for ice-cream seller Cold Stone Creamery.

To contact the reporters on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net; Bomi Lim in Seoul at blim30@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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