The Daou Kiwoom Group-CJ Group consortium has been selected as the preferred bidder for the acquisition of JoongAng Ilbo. In terms of total assets, Daou Group ranks 47th in the business sector, while CJ Group ranks 14th. Attention is now turning to whether the two groups' financial strength and their experience in broadcasting, content, and entertainment businesses will help normalize JoongAng Ilbo's profitability.
According to investment banking (IB) industry sources on the 19th, the Daou-CJ consortium was selected as the preferred bidder for the acquisition of JoongAng Ilbo. The final bidding round for the sale of JoongAng Ilbo held that day saw participation from six entities: the Daou-CJ Group consortium, Orion, Global Sear, OK Holdings, E-Broadcasting, and Geumbo Development. Among them, the Daou Group-CJ Group consortium is known to have submitted the highest bid amount.
Daou formed a consortium with CJ Group at the last minute, turning the tide of the deal. CJ Group, classified as part of the broader Samsung family, holds a 9.24% stake in JoongAng Ilbo through CJ Olive Network. CJ Olive Network is the third-largest shareholder, following Central Holdings (64.73%) and Hong Suk-hyun, Chairman of Central Holdings (15.63%).
The two groups formed a consortium due to shareholding ratio regulations. Under the Newspaper Act, cross-shareholding restricted business groups are prohibited from holding more than 50% of the shares in a daily newspaper, and both groups fall under this category.
The sale price for JoongAng Ilbo is reported to be in the range of 500 billion won. The acquisition will take place through the purchase of new shares issued by JoongAng Ilbo via a rights offering (paid-in capital increase). Market observers predict that the two groups will split the share acquisition equally, each taking half.
The core of this transaction is debt repayment capacity. Currently, JoongAng Ilbo's total short- and long-term borrowings and corporate bonds amount to 350 billion won. Corporate bonds maturing by February next year alone reach 62.4 billion won, with a total of 129.4 billion won in corporate bonds coming due over the entire next year.
Business synergies with JoongAng Ilbo are also anticipated. Daou Keum Group has Kid Studio, a webtoon and web novel platform, as an affiliate, while CJ Group has CJ ENM as an affiliate.
Since entering corporate workout (business restructuring) in July last month, JoongAng Ilbo has been proceeding with the sale of its management rights. The sale is expected to be completed by the end of this year at the earliest.
However, further discussion is needed regarding the scale of the new share purchase price required for financial structure improvement. Coordination on acquisition terms with the JoongAng Ilbo labor union also remains. The JoongAng Ilbo labor union is demanding 10 major principles from the acquirer, including a ban on concurrent positions in management and editorial roles, a prohibition on artificial restructuring, employment succession, minimization of acquisition financing, the enactment of an editorial charter, and the establishment of independent bodies.
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