The search for a new owner of Central Daily Newspaper is progressing unexpectedly smoothly. Following a successful bidding round with six participating companies, the selection of a preferred negotiation partner is also moving ahead without issues. The preferred partner is a consortium of Dowoo-Kium, CJ, and Shinsegae, which has been evaluated as the strongest contender in terms of capital and justification. Investment banking sources have stated that the sale of Central Daily has effectively passed the critical halfway point. The final sales contract is expected to be signed by the end of the year. Once the contract is finalized, Central Daily will embark on a new chapter, breaking away from the governance structure led by Hong Seok-hyun of Central Holdings for the past 27 years.
According to investment banking sources on October 22, Samil Accounting Corporation, the advisor for the Central Daily sale, has recently selected the Dowoo-Kium, CJ, and Shinsegae consortium as the preferred negotiation partner. Among the six companies that participated in the bidding, this consortium received the highest score for its funding capabilities. The acquisition proposal submitted by the consortium is reported to be approximately 550 billion won.
Notably, just before the selection of the preferred partner, Shinsegae joined the consortium, providing a justification for the participation of the broader Samsung-affiliated group (CJ and Shinsegae). An investment banking source noted, "CJ requested Shinsegae's participation at the last minute, and Chairwoman Jeong Yu-kyung accepted the request," adding that another group within the Samsung-affiliated family considered joining but ultimately decided against it.
Industry attention is now focused on how the three-member consortium will acquire the controlling stake in Central Daily. Currently, Central Holdings is the largest shareholder, holding 64.73%. Hong Seok-hyun, the chairman of Central Holdings, is the second-largest shareholder with 15.63%. Including related parties such as Hong Seok-jun, Hong Seok-kyu, Hong Seok-jo, and Hong Ra-young, the maximum shareholder group holds 80.75%. CJ Group and Shinsegae, which participated in this acquisition process, hold 9.24% and 0.06%, respectively.
According to investment banking sources, the method of acquiring management rights will reflect Central Daily's weak financial condition, likely involving a reduction in existing shares followed by a third-party allocation of new shares by the consortium. In this process, the existing shareholders' stake is expected to decrease to below 5%. The industry anticipates that through this reduction and subsequent capital increase, the consortium could secure up to 95% of the management rights in Central Daily. It is reported that the share distribution among the companies has been tentatively agreed upon, with Dowoo-Kium taking about 50%, CJ about 30%, and Shinsegae about 20%. However, adjustments to Dowoo-Kium's stake are expected to comply with regulations that limit ownership of daily newspapers by specific large corporate groups to no more than 50%.
With the selection of the preferred negotiation partner, the industry expects a swift normalization of Central Daily. As of the end of June, Central Daily reported total capital of 28.7 billion won, falling below its capital of 33 billion won, indicating a state of capital erosion. The deficit surged from 7.7 billion won at the end of last year to 99.6 billion won, while total liabilities increased from 374.8 billion won to 431.1 billion won. A business source stated, "The newly injected funds are expected to be used for repaying high-interest loans and improving financial structure, with creditors aiming for operational normalization by the end of the year," adding that the key issue will be how management rights distribution, board composition, and editorial independence will be ensured under the new governance structure.
If the acquisition proceeds successfully, the industry is paying close attention to how roles will be divided between Dowoo-Kium and the Samsung-affiliated group (CJ and Shinsegae). Currently, it seems likely that Dowoo-Kium will lead the management rights, but there are also discussions about a potential joint management structure between Dowoo-Kium and the Samsung-affiliated group.
* This article has been translated by AI.
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