South Korea’s leading cosmetics original development manufacturer (ODM) Kolmar Korea Co. has moved a step closer to becoming the new owner of CJ HealthCare Corp., the pharmaceutical business arm of CJ Group.

According to multiple sources from the investment bank industry on Tuesday, CJ CheilJedang and its sales advisor Morgan Stanley selected a consortium led by Kolmar Korea as the preferred bidder to buy a full stake in CJ HealthCare. Kolmar Korea joined the auction by tendering a final bid earlier this month in a consortium with private equity firms Mirae Asset Private Equity, H&Q Asia Pacific Korea, and STIC Investments Inc. The market estimates the sale price of the full stake to be about 1.2 trillion won ($1.1 billion).

The acquisition will make Kolmar Korea join the mainstream with own name after having mostly manufactured for others. Kolmar Korea expanded its business to pharmaceuticals in 2002 and has positioned itself as Korea’s leading pharmaceutical CMO by providing service to major pharmaceutical companies Yuhan Corporation, Hanmi Pharm Co., and Ahn-Gook Pharmaceutical Co.

A deal will mean exit of CJ CheilJedang after 34 years in the drug market. The company, which owns a 100 percent stake in CJ HealthCare, jumped into pharmaceuticals business in 1984 by taking over local drug maker Yoopoong Pharmaceutical. CJ HealthCare has developed and distributed mainly generic and novel drugs. The company’s health and beauty division, which accounts for about 15 percent of CJ HealthCare’s total sales, also produces health beverages including anti-hangover drinks Condition and Hutgaesoo.

CJ Group plans to complete the acquisition by next month after negotiating final terms with Kolmar Korea consortium.

By Kim Hye-soon and Lee Eun-joo

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