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CJ Logistics, NPS eyeing to sell Chinese logistics unit

Oct 08, 2020 (Gmt+09:00)

South Korea’s leading logistics firm CJ Logistics Corp. and the National Pension Service have reached out to logistics companies and global private equity firms to sell CJ Rokin, a Chinese logistics firm, according to investment banking industry sources on Oct. 8.

In 2015, CJ Logistics and NPS jointly purchased a 71.4% stake in CJ Rokin for 455 billion won ($394 million), with the CJ Group unit putting up 312 billion won.

The Chinese unit's enterprise value is now estimated at $1 billion, reflecting increased demand for frozen foods on account of the global pandemic which has fueled expectations for logistics companies’ performance.

“We’re reviewing the sale of CJ Rokin to adjust our business portfolio in China,” said a source from CJ Logistics. He added that the planned sale of the Chinese unit would not indicate its withdrawal from China.

Details of the ownership by CJ and NPS in the Chinese firm were not disclosed.

The sale process is seen as part of CJ Group's efforts to cash out its stake holding in CJ Rokin to finance the parent CJ Group's restructuring efforts.

CJ Rokin operates 48 centers across China and boasts a transportation and distribution network that connects about 1,500 cities.

In China, CJ Rokin has a robust portfolio of customers, including soft drink giant Pepsi, global confectionery company Ferrero Group and Norvartis Pharmaceuticals among others. The company manages over 400 cold chain transportation vehicles and a 260,000 square-meter warehouse for refrigerated and frozen products, giving it a competitive edge in the cold chain supply sector.

"CJ Logistics will be able to improve its finance through the proceeds from the sale," said Jay JH Ryu, an analyst at Mirae Asset Daewoo Securities. "CJ Logistics will be able to pocket around $120 million by selling its stake (CJ Rokin)."

The food and entertainment-focused CJ Group has been shedding non-core assets. In August, CJ Logistics selected Credit Suisse as its sale advisor to sell its profitable construction business. In September, CJ Foodville Corp. put up its bakery chain Tous Les Jours with a price tag at around 300 billion won as part of the restructuring process.

In the second quarter of this year, CJ Logistics recorded an operating profit of 83.9 billion won.

By Hyun-il Lee and Jong-pil Park

Edited by Danbee Lee

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