CJ Foodville, the restaurant business arm of South Korean conglomerate CJ Group, is struggling to offload its bakery chain division Tous Les Jours as two of four bidders who submitted preliminary offers have walked away from the deal.

The four bidders, including KG Group, JKL Partners, Affirma Capital and a consortium of NH Private Equity and Opus Private Equity, submitted non-binding offers for the chain during the first round of bidding on September 11. However, the KG Group and the consortium of NH PE and Opus PE have reportedly decided to pull out of the deal, industry sources said on September 17.

Preliminary offers were far below CJ Foodville’s desired price of 300 billion won. Most of bidders offered the value of the chain at about 200 billion won ($258 million) and there was a bidder who offered the valuation in the mid-100 billion won range, industry sources said.

“We have reviewed Tous Les Jours thoroughly, and think it will be hard to fulfill CJ’s expectations in terms of price,” said an official of an advisory firm. “Potential buyers already have the highest price they could pay in mind, so they might have to pull out of the deal if the seller demands a higher bid price.”

The sale process of the bakery chain has been delayed, with neither selection of shortlisted bidders nor due diligence being carried out yet. Potential buyers have also not been informed of further process.

The seller has attempted to push up the company’s valuation by making strategic investors compete with PE firms. CJ Foodville sent investment memorandum to domestic conglomerates as well as mid-sized strategic investors and encouraged PE firms to join the race.

However, as only two PE firms are left in the race after the first round of bidding, it raises the possibility that the deal may lead to a competition among only PE firms. This would make CJ Foodville unable to successfully sell its bakery unit in both price and non-price terms.

Industry insiders expect the seller to draw up a variety of options including tentatively halting its sale process and seeking additional potential buyers. The seller is seemingly losing its momentum to complete the transaction amid disappointing response from potential buyers.

An industry source said CJ Foodville – which initially tried a private deal last year and is currently selling the chain through a public auction – might consider going back to a private deal. (Reporting by Ik-hwan Choi)