[THE INVESTOR] CJ Freshway has submitted a letter of intent to take over Welliv, a food service subsidiary of Daewoo Shipbuilding and Marine Engineering, according to Korea Economic Daily on Sept. 29.

The foodstuff distribution and school meal provision subsidiary of CJ is among the 13 candidates for the bid to acquire 100 percent stake in Welliv.

Welliv posted 221.7 billion won (US$200.87 million) revenue in 2015 with 12.5 billion won operating profit, and about 90 percent of its turnover comes from catering to the shipbuilding company’s headquarters and affiliated companies as well as the shipyard in Okpo, South Gyeongsang Province.

CJ Freshway’s sales in the first half of 2016 came in at 852.3 billion won, and food service including catering accounted for 150 billion won.

“If CJ Freshway takes over Welliv, its annual turnover will increase by 200 billion won,” according to an investment banking industry source.

Although merging the business will obviously lead to economy of scale, the fact that most of its revenue is reaped from the parent company might burden any candidate, experts say.

Sales manager KPMG International will conduct preliminary investigation till end-October.

By Hwang You-mee (glamazon@heraldcorp.com)