MBK Partners and Mirae Asset Securities are poised to force CJ CGV Co. to relinquish control of its lucrative Asian cinema operations through drag-along rights that became effective this month, according to investment banking sources.
The two financial investors, holding a combined 17.58% stake in CGI Holdings Co., notified South Korea’s largest multiplex chain that they will require the parent company to jointly sell their shares to third parties unless CJ CGV buys back their position at a premium.
CGI Holdings oversees CJ CGV’s cinema operations across China, Indonesia and Vietnam, contributing nearly half of the parent company’s earnings and 33% of revenue over the past three years. The subsidiary operates over 270 cinemas with approximately 1,800 screens across the three markets.
The standoff stems from a failed initial public offering promise. When MBK and Mirae Asset invested 333.6 billion won ($240.5 million) in 2019 for their stake, CJ CGV pledged to list CGI on the Hong Kong Stock Exchange by June 2023 at a valuation exceeding 2 trillion won. The listing never materialized as the cinema industry struggled with pandemic restrictions and competition from streaming platforms.
CJ CGV extended the drag-along deadline to July 19, 2025, and has already repurchased an 8.7% stake from the investors for 126.3 billion won under a call option agreement. However, the company’s financial position has deteriorated significantly.
As of late 2024, CJ CGV’s borrowings ballooned to 1.06 trillion won, representing a 7.2% increase from the previous year. The company held just 53.9 billion won in cash and equivalents at the end of the first quarter and failed to attract investors for a 100 billion won corporate bond offering.
The drag-along mechanism gives MBK and Mirae Asset the power to compel CJ CGV to sell alongside them if the cinema operator cannot afford the share buyback. Industry observers suggest this could force CJ Group to exit the Chinese, Indonesian and Vietnamese markets entirely, potentially ending a two-decade expansion strategy across Asia.
Some analysts believe separate sales of CGI’s operations in each market could fetch attractive premiums, as these economies are recovering faster than South Korea’s domestic cinema business.
