By Nam Hyun-woo
CJ CheilJedang said Sunday that it has decided to sell its shares in Samsung Life Insurance. The move is interpreted as a preparation for a massive investment plan worth 900 billion won ($797 million) which came after CJ Chairman Lee Jay-hyun's return to management.
According to CJ CheilJedang, the processed food maker will sell all of its 2,985,850 shares through an after-hours block trade.
The company offered the shares at 357.69 billion won, a 3 percent discount compared to the market price. It accounts for a 1.49 percent stake in Samsung Life.
CJ said the measure is aimed at improving its financial structure and securing resources for future investments.
Last month, CJ Group announced the 900 billion won investment plan, which includes the acquisition of a Brazilian company making soy protein concentrate, Selecta, for 360 billion won.
The plan garnered keen attention as it was the group's first major strategic move since Lee's return. Lee returned to CJ management after a four-year hiatus. He served a prison term for embezzlement and tax evasion.
"If CJ CheilJedang sells the shares at a reasonable price, it will be a positive event for the company because CJ's profit coming from the shares has been very small," Korea Investment & Securities analyst Lee Kyung-joo said.
"The important thing is how the money will be used. If the company uses the money for new merger & acquisition (M&A) deals, investor sentiment in the company will become more positive."
The stake sale would also shore up the balance sheet of the company, which saw its debt rise over the past few years.
According to Korea Ratings, CJ CheilJedang's total liabilities stood at 6.66 trillion won last year, up 34.9 percent from 4.94 trillion won in 2012.
Such an increase was attributed to its aggressive moves to expand businesses overseas. From 2006 to 2016, the company channeled 5.9 trillion won into foreign investments, acquiring a number of Vietnamese food products makers, including Kim&Kim JCS, a kimchi maker there.
Market watchers say another factor that led CJ to sell its Samsung Life shares would be appreciation of the stocks.
Samsung Life's stock was traded at 110,000 won Jan. 2 this year but now fluctuates at about 120,000 won, growing around 10 percent during the period.
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