CJ Hello is garnering attention as it is confirmed that it will be acquired by LG Uplus, said KB Investment and Securities on Feb. 28 maintaining a “hold” recommendation and 7,900 won (US$7.06) target price. 

Although the acquisition price has been set at 800 billion won, less than market estimates, it will be able to secure competitiveness by combining wired and wireless products while economies of scale will lead to a rise in commissions for home shopping network and reduce contents sourcing costs. However, the fact that LG Uplus has simply acquired CJ Hello’s stake and LG’s wired business remains, it may also accelerate CJ Hello subscribers’ exit, said analyst Kim Jub-seop. 

CJ Hello is still risking the possibility that revenue from its platform could decline. Meanwhile as LG Uplus will maintain the governance structure for the time being, there may not be a significant change in revenue and program usage cost, he cautioned.

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