Dongwon chief emerging in M&A market

By Nam Hyun-woo
Dongwon Group Chairman Kim Jae-chul

Dongwon Group Chairman Kim Jae-chul is emerging in the domestic merger and acquisition (M&A) market, striking a series of large deals in just a few years.

According to the group Monday, it struck a deal last week acquiring Doosan Feed, a stock raising and feed making unit of Doosan Group, at 35.3 billion won ($30.8 million).

With the contract, Dongwon F&B, a food affiliate of Dongwon Group, will acquire Doosan Feed that posted 84.6 billion won in sales and 3.3 billion won in operating profit last year.Dongwon Group became the sole preferred bidder for Doosan Feed, which was put up for sale following Doosan Group’s decision to restructure its governance due to a management crisis.

Dongwon said it plans to “create synergy” with Dongwon Farms, a Dongwon F&B subsidiary whose business domain is the same as Doosan Feed. Thanks to the takeover, market observers anticipate that Dongwon Farms will likely substantially raise its sales this year.

The acquisition is the latest in Dongwon’s series of M&A deals from 2015 worth 620 billion won. Last December, Dongwon Industries spent 420 billion won to purchase the logistics firm Dongbu Express. In July, the group acquired W Food Market, which runs an online home meal replacement (HMR) shop, The Banchan, at 30 billion won.

In 2015, Dongwon F&B acquired Kumchon Meat, an online meat distributor, at 45 billion won and inked two more deals for Vietnam-based packaging material companies.

Dongwon’s most noticeable M&A is the 2008 acquisition of StarKist, one of the world’s leading tuna product brands at $363 million. The deal not only helped Dongwon consolidate its status as a leading tuna product company but also helped StarKist turn profitable.

Dongwon’s W Food Market deal also attracted investors’ attention because the HMR market in Korea is emerging.

According to a report from Golden Bridge Investment & Securities, Korea’s HMR market expanded to 2.2 trillion won in 2016 from 800 billion won in 2010. Korea’s per capital spending on HMR stood at $16 in 2016, which was far lower than the $49 of the U.S., $53 of the U.K. and $26 of Japan. The report concluded the domestic HMR market will expand quickly in the coming years.

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