이 기사는 2022년 02월 11일 08시04분 thebell에 표출된 기사입니다

South Korea’s CJ ENM has decided to reconsider its plan to set up a second multi-studio by splitting off its content production business into a separate entity, according to industry sources.

The establishment of a new studio is essential to its business strategy, but the company has reportedly decided to review the method from scratch, taking concerns about the split-off into account.

CJ ENM announced its split-off plan when it acquired Hollywood studio Endeavor Content in November 2021, aiming to strengthen its production capabilities and expand its footprint into global markets.

The plan, however, faced a cold reaction from market insiders. There were concerns about damage to shareholder value in case the newly established subsidiary goes public in the future. LG Chem, which split off its battery business as LG Energy Solution last year to take it public, had also faced strong opposition from minority shareholders.

Shares of CJ ENM closed at 180,400 won ($150.84) on November 19, 2021, before plunging to around 170,000 won on the next business day. The share price has continued to decline to around 130,000 won and finished at 119,500 won on January 27, the lowest price this year.

CJ and Naver own 40.7% and 5% of CJ ENM, respectively, as of the end of September 2021. Naver and CJ ENM in 2020 entered a 150 billion won equity swap for strategic alliance, through which Naver secured more than 1.09 million shares of CJ ENM at 136,900 won apiece.

Based on the closing price of 119,500 won on January 27, shares of CJ ENM owned by Naver are worth 130.9 billion won, which represent a loss of nearly 20 billion won. In the equity swap, CJ ENM secured 523,560 shares of Naver at 286,500 won apiece. With Naver’s stock price currently hovering above 300,000 won, CJ ENM seems to be enjoying a valuation gain through the equity swap.

CJ ENM plans to push forward the original plan to shift into a multi-studio system in a bid to maximize its production capabilities, but the method is expected to be changed from the planned split-off amid growing concerns in the market. (Reporting by Hyo-beom Lee)