SEOUL: One of South Korea’s biggest newspapers JoongAng Ilbo is nearing a deal to find a new buyer after the struggling media company picked a consortium including one of its top shareholders as the preferred bidder.
The consortium including Daou and CJ Group received the highest score in a competitive auction after bids were assessed on price, financing capacity, improvements to the newspaper’s balance sheet and employment stability, JoongAng Ilbo said Monday, citing Samil PwC, the lead advisor of the sale.
Daou Technology under the Daou Kiwoom Group said in a regulatory filing yesterday that the company was part of the consortium.
South Korean retail giant Shinsegae Inc also told Bloomberg News it would also be participating in the consortium.
JoongAng Ilbo was pushed into creditor-led restructuring as affiliates in the broader media conglomerate JoongAng Group came under financial strain.
The preferred group offered around 500 billion won (US$377mil), while most rival bids were in the 300 billion won to 400 billion won range, Korea Economic Daily reported.
JoongAng declined to comment on the deal value.
“We intend to prioritise editorial independence and contribute to stabilising JoongAng Ilbo’s management and strengthening its long-term competitiveness,” CJ Group said in a statement.
Local conglomerate Daou did not immediately return a request for comment.
The acquisition will be carried out through a third-party allotment of new shares, with the consortium becoming JoongAng Ilbo’s largest shareholder.
The proceeds will flow directly to the newspaper and be used for debt repayment and other measures to normalise operations, according to JoongAng Ilbo.
The broader JoongAng Group’s broadcasting arm, JTBC, defaulted on its securitised loans and sought a court-led restructuring under the Seoul Bankruptcy Court in June.
The 61-year-old newspaper is a part of a media group spanning television networks, movie theaters and content production studios in Korea.
The group’s stumble revealed a deep financial hole in its closely intertwined financial structure.
The partnership also offers a way to navigate South Korean restrictions on newspaper ownership.
Both Daou Kiwoom and CJ are large business groups subject to rules limiting each from owning more than 50% of a general daily newspaper.
Daou Kiwoom initially pursued the newspaper on its own before joining forces with CJ Group ahead of the final bidding, Yonhap reported. CJ Group is already JoongAng Ilbo’s third-largest shareholder, holding a 9.24% stake through CJ OliveNetworks, according to JoongAng.
Daou Kiwoom has businesses ranging from securities and asset management to technology and webtoons, while CJ Group’s operations include entertainment and media through CJ ENM and parcel delivery through CJ Logistics. — Bloomberg
