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Coway takeover suffers setback as CJ drops bid

South Korean conglomerate CJ Group has dropped its bid to buy the country’s top water purifier maker Coway, a decision that could protract the takeover deal that is expected to be worth more than 2 trillion won ($1.7 billion), sources said Tuesday.

“CJ Group submitted a preliminary bid, but did not participate in the final bid,” the company said in a regulatory filing. 

Seoul-based private equity firm MBK Partners, which holds a 30.9 percent stake in Coway, opened the final bid responses Monday only to see low turnout, as some prospective buyers, including CJ Group, dropped out of the deal.

A source familiar with the deal said some Chinese firms requested to extend the due date in order to review their interest. “The acquisition process will be drawn out,” he said.

An MBK official declined to comment on the bidding process and CJ’s pullout.

CJ’s decision to withdraw came after it failed to form a consortium with Chinese home appliance firm Haier Group to buy the controlling stake in Coway. Another preliminary bidder Carlyle Group also walked away from the acquisition deal.

According to market watchers, Coway’s hefty price tag has been a deterrent for potential buyers.

MBK’s stake in Coway was worth 2.02 trillion won as of Tuesday’s close. Adding a premium for management control could drive up the deal value to between 2.5 trillion won and 3 trillion won, analysts said. CJ reportedly hopes to cut the price to around 2 trillion won.

MBK acquired the controlling stake in Woongjin Coway in 2013 from a cash-strapped Woongjin Group for about 1.2 trillion won. The company was later renamed Coway.

Analysts expected that Coway will log 2.28 trillion won in sales and 445 billion won in operating profits, up from 2.16 trillion won and 364.4 billion won a year earlier.

By Park Han-na (