CJCJ is one of the largest food producers in South Korea, and saw some US$14.5bn in sales last year. It is the food and bioengineering arm of the CJ Group conglomerate. The (formerly) family-owned Schwan’s is the parent company of the iconic Tony’s Pizza and Mrs Smith’s pies.
CJCJ’s purchase will give it control to the majority of Schwan’s food businesses, which comprises 10 distribution centres and 17 food manufacturing facilities in the United States.
According to the official press release: “The transaction will include 80% of Schwan’s Company and specific subsidiaries that focus on foods sold in retail and grocery channels and food-service venues.”
“The Schwan family will retain 20% ownership in the businesses being sold to CJCJ and will also retain 100% ownership in Schwan’s Home Service, Inc.”
Upon completion of the deal, Schwan’s will operate as a subsidiary unit of CJ Foods America Corp.
Schwan’s CEO Dimitrios Smyrnios described the transaction as ‘a new and exciting era’ which would lead to a ‘very bright’ future for the company.
“We want to grow. This is not a cost-cutting exercise,” he said to Salina.
CJCJ added in an announcement that this move is hoped to accelerate its global food business, by first solidifying its presence in the United States market.
“Schwan’s Company has business all over the U.S. market,” it said in a statement.
“[The] acquisition will boost CJ CheilJedang’s driving force to expand in the United States where the market for processed food is the largest in the world.”
According to Reuters, this purchase is one of the biggest conducted by a South Korean company, behind Samsung Electronic’s acquisition of Harman (a car tech company in the United States) for US$8bn.
Reports also revealed that discussions surrounding the CJCJ acquisition had been in progress as far back as August this year.
CJCJ’s rapid overseas expansion
CJCJ has been on a mission to establish its global presence, especially in the United States, over the past several years.
Earlier this year in August, CJCJ acquired 100% of frozen foods supplier Kahiki Foods, which specialises in Asian cuisine. According to the official release, Kahiki Foods supplies to over 20,000 stores in the United States, and now also operates as a subsidiary of CJ America.
CJCJ also owns Asian fast-food chain Bibigo in the United States, which is found across California.
In addition, the company also purchased German-based Mainfrost, a manufacturer of several products under CJCJ’s Bibigo brand, in hopes of pushing forth its Europe presence. CJ revealed that Mainfrost’s 2017 revenue was over US$8.85bn.