CJ Foodville Transfers Production Base Jincheon Factory to CJ CheilJedang... "Sold for 20.7 Billion Won"

If Tous Les Jours is also sold, production bases disappear
CJ may close Foodville business and focus on CheilJedang

[Asia Economy Reporter Choi Sunghye] CJ Foodville has sold its production base, the Jincheon factory in Chungbuk, following Twosome Place. It appears to have taken measures to secure maximum liquidity after suffering a direct hit due to the structural changes in the domestic food and dining industry and the outbreak of the novel coronavirus disease (COVID-19). CJ Foodville is currently also pushing for the sale of its bakery brand Tous Les Jours.

On the 14th, CJ Foodville and CJ CheilJedang held a board meeting and announced the resolution to transfer the Jincheon factory. CJ CheilJedang agreed to acquire the Jincheon factory owned by CJ Foodville for 20.737 billion KRW. The transfer date is set for November 30.

Previously, in February last year, CJ CheilJedang acquired the Jincheon factory site from CJ Foodville for 10.2 billion KRW. CJ Foodville had been producing sauces at the Jincheon factory. CJ CheilJedang plans to increase the production of home meal replacement (HMR) products by acquiring the Jincheon factory.

With the sale of the Jincheon factory, CJ Foodville's production bases will effectively disappear. The Eumseong factory is also likely to be transferred along with the sale of Tous Les Jours.

CJ Foodville has been continuously selling assets to offset losses. Last year alone, CJ Foodville posted an operating loss of 6.5 billion KRW (on a separate basis). Despite reducing the number of stores and implementing restructuring, it failed to return to profitability. In 2018, it sold 40% of its coffee franchise 'Twosome Place' shares to the Hong Kong-based private equity fund Anchor Equity Partners and others, then sold 45% last April, and finally sold the remaining 15% last month on the 30th for 71 billion KRW.

The core business Tous Les Jours is also undergoing a sale process, with Deloitte Anjin selected as the lead manager. According to industry sources, 5 to 6 parties have shown interest in the preliminary bidding. Since the Eumseong factory produces bakery products, it is highly likely included in the sale of Tous Les Jours.

There are even speculations in the industry that CJ might exit the Foodville business. If Tous Les Jours and the production factories are sold, Foodville will be left only with dining businesses such as VIPS, Season's Table, Jeil Jemyunso, and concession businesses like N Seoul Tower. There is also speculation that the remaining businesses could be transferred to CJ CheilJedang and Freshway. If Foodville exits the business, CJ is expected to focus more on the K-food business through CJ CheilJedang.

However, the sale of Tous Les Jours is unlikely to proceed smoothly. First, there is strong opposition from franchisees. The National Tous Les Jours Franchisee Council filed a provisional injunction last month at the Seoul Central District Court to prohibit the sale of Tous Les Jours shares against CJ Group and Chairman Lee Jae-hyun. On the 12th, CJ reportedly met with representatives of the National Tous Les Jours Franchisee Council, a group of Tous Les Jours franchisees. The franchisees presented two conditions to CJ: ▲ absolute opposition to acquisition by private equity funds ▲ willingness to consider positively if acquired by a large corporation at the CJ level or above.

A council representative said, "Private equity funds are expected to maximize profits rather than enhance the Tous Les Jours brand value and then sell it to another company. In that process, marketing costs will be passed on to franchisees, and mutual growth will disappear, so we are firmly opposed." They added, "If the CJ title disappears, the acquirer must be a large corporation of equal or higher level. Baking is a 'comprehensive art' business that combines various elements."

This content was produced with the assistance of AI translation services.