Daou Kiwoom Puts Up the Money, Broader Samsung Family Holds the Reins: Inside the JoongAng Ilbo Bid

CJ, Shinsegae and Daou Kiwoom Consortium Named Preferred Bidder for JoongAng Ilbo
Daou Kiwoom, Largest Contributor, to Effectively Serve as FI
CJ, Shinsegae and Others in the "Broader Samsung Family" Expected to Lead Management

Yonhap News Agency

A consortium comprising CJ Group, Shinsegae and Daou Kiwoom Group has been selected as the preferred bidder for JoongAng Ilbo. Although Daou Kiwoom Group will be the consortium’s largest investor, observers say CJ Group is leading the actual acquisition plan, with Daou Kiwoom effectively serving as a financial investor. In effect, JoongAng Ilbo, founded by the late Lee Byung-chul, founder of Samsung Group, is returning to the broader Samsung family after 27 years.

According to investment banking (IB) industry sources on October 21, Shinsegae, led by Chairwoman Jung Yoo-kyung, is also participating in the Daou Kiwoom-CJ consortium, which was selected as the preferred bidder for JoongAng Ilbo. One allocation under consideration would have Daou Kiwoom contributing 50% of the consortium’s investment, with CJ and Shinsegae splitting the remaining 50%. The specific division of stakes between CJ and Shinsegae has reportedly not yet been finalized.

The sale of JoongAng Ilbo will proceed through a third-party allotment of new shares. The consortium’s proposed acquisition price is around KRW 500 billion. Proceeds from the new share issuance will go to JoongAng Ilbo and are expected to be used to improve its financial structure, including repaying debt.

What stands out is the consortium’s actual division of roles. Although Daou Kiwoom is set to shoulder the largest share of the funding, analysts say CJ was at the center of and led the deal from the outset. Daou Kiwoom is more akin to a financial investor providing funds, while CJ and Shinsegae are expected to focus on restoring JoongAng Ilbo’s management and setting its business direction. CJ Group is already a major shareholder in JoongAng Ilbo, holding a 9.24% stake through CJ OliveNetworks. Accordingly, even after the new shares are acquired, the broader Samsung family, including Shinsegae, would have greater control than Daou Kiwoom. An IB industry source said, “Daou Kiwoom is providing funds on a senior basis, while CJ and Shinsegae may participate in management in exchange for coming in on a more junior basis.”

CJ Group’s decision to team up with Daou Kiwoom Group was also influenced by legal and procedural constraints. The current Newspaper Act prohibits large business groups above a certain size from holding more than 50% of a corporation that operates a general daily newspaper.

Shinsegae’s participation also gives the deal symbolic significance as the broader Samsung family’s reacquisition of JoongAng Ilbo. The newspaper was founded in 1965 by Lee Byung-chul. After separating from Samsung Group in 1999, it was managed by the family of Hong Seok-hyun, chairman of JoongAng Holdings. CJ Chairman Lee Jae-hyun is Lee Byung-chul’s grandson, while Chairwoman Jung is his granddaughter. Industry sources say that before Shinsegae’s participation was confirmed, an investment proposal was also made to the side of Lee Seo-hyun, president of Samsung C&T.

Daou Kiwoom’s participation in the role of a financial investor may also help avoid opposition from shareholders of its affiliates. Based on the consortium’s investment proportions, Daou Kiwoom would have to contribute around KRW 250 billion. Had it joined as a strategic investor, shareholders could have questioned the investment rationale and profitability if funds from publicly listed affiliates were used to acquire a media company with little direct connection to their core businesses.

Orion, which previously participated in the bidding for JoongAng Ilbo, also faced shareholder opposition. U.S.-based investment firm Tutton Capital sent an open letter to Orion’s board on October 19, calling for it to withdraw from the acquisition. The letter argued that using funds generated by the food business to acquire a media company unrelated to Orion’s core business would not serve shareholders’ interests.

Meanwhile, the sale of JTBC, another key affiliate of the JoongAng Group, has yet to gain momentum. The sale notice, initially expected this month, has been postponed until November. The sales adviser is gauging potential buyers’ interest, but even the structure of the deal has not been finalized. Some say the weak broadcasting market and complex rehabilitation proceedings are also making the acquisition less attractive.

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