CJ ENM embraces ‘La La Land’… The nightmare of physical division

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CJ ENM embraces ‘La La Land’… The nightmare of physical division

Edit 2021.11.25 10:35Input 2021.11.25 10:35

[아시아경제 지연진 기자] The corporate value of CJ ENM, which took over the production company of the movie ‘La La Land’, has recently taken a step backwards. Rather than the expectation that the company will expand its business to the global content market through a mega-scale merger and acquisition (M&A) worth 1 trillion won, the ‘physical division learning effect’ is holding back the stock price.

CJ ENM fell more than 4% at the beginning of the market on the 25th and was pushed back to the low level of 150,000 won. The company’s stock price has been on a steep decline for four days in a row since the 22nd. The closing price on the 19th, just before the continuous decline began, was 18,400 won.

CJ ENM announced on the 19th that it would acquire an 80% stake, including management rights of the American production company ‘Endeaver Content’, and promote a new corporation through a physical division to strengthen content production capabilities. The new corporation plans to take charge of major productions in the entertainment, drama, film, and animation businesses.

The market interprets it as the officialization of ‘Studio Tiger (tentative name)’ following CJ Group’s drama production company ‘Studio Dragon’, and it seems to weaken investor sentiment. Physical spin-off is the establishment of a new subsidiary by dividing only the assets and liabilities of a company, and there are many cases that act as a negative factor because of concerns that the separation of the core business may reduce the competitiveness of the parent company. As LG Chem and SK Innovation announced a physical spin-off of their battery business, their stock prices plummeted.

Previously, CJ ENM established Studio Dragon through a physical division of the drama production division in 2016 and listed it in November 2017. Lee Ki-hoon, a researcher at Hana Financial Investment, said, “There is no growth strategy for CJ ENM after the spin-off. At least a commerce strategy that encompasses them all must be accompanied, but it is rather unfortunate that all growth strategies are being split.” % lowered.

By Ji Ji-jin, staff reporter [email protected]


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