CJ Group could team up with Dow Kiwoom Group to seek management control of JoongAng Ilbo, industry sources said.

On Oct. 16, the investment banking industry said CJ Group is known to be pursuing a plan to form a consortium with Dow Kiwoom Group to take part in the main bid for the sale of JoongAng Ilbo, which closes on Oct. 19.

CJ Group is the third-largest shareholder of JoongAng Ilbo, holding a 9.24 percent stake through affiliate CJ OliveNetworks. It did not submit a letter of intent in last month’s preliminary bid, but a joint acquisition with Dow Kiwoom Group is being discussed ahead of the main bid.

Dow Kiwoom Group has already taken part in the preliminary bid through affiliate Daou Tech. JoongAng Ilbo is proceeding with the sale process under the management of its main creditor bank, Hana Bank, and participation in the main bid by companies that did not join the preliminary bid is, in principle, restricted.

The background to forming a consortium is also being linked to the Newspaper Act provision that large companies and their affiliates cannot own more than 50 percent of the shares of a corporation that publishes a general daily newspaper. If the two sides proceed with a joint acquisition, the allocation of stakes and how to finance the acquisition are expected to be key variables.

JoongAng Ilbo has pursued a sale of management control since entering a workout in July. The sale will be conducted through a third-party allotment paid-in capital increase, rather than through existing shareholders disposing of their shares. The buyer will secure newly issued shares to become the largest shareholder, and the funds raised will be used to improve JoongAng Ilbo’s financial structure.

The list of qualified acquisition candidates currently includes six entities: Daou Tech, Global Sae-A, Geumbo Development, Orion, E-Broadcasting and OK Financial Group.

If CJ Group moves ahead with a joint bid with Dow Kiwoom Group, the existing competitive landscape for the acquisition is expected to change. The consortium’s formation and whether it will ultimately participate in the main bid have not been finalised, and the actual acquirer is expected to be decided through the bidding result and the creditors’ selection procedures.