Lotte Confectionery to merge with Lotte Foods

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Lotte Confectionery to merge with Lotte Foods

Published: 23 Mar. 2022, 18:43 Updated: 23 Mar. 2022, 18:53

Lotte Confectionery's Pepero chocolate snacks are displayed at a discount mart in Seoul. The company will merge with Lotte Foods. [YONHAP]

Lotte Confectionery will merge with Lotte Foods in July.

The transaction was announced by the boards of both companies on Wednesday.

It will be put to shareholders of both companies at annual meetings on May 27, and if approved the merger will be complete on July 1.

Each share in Lotte Foods will be swapped for 2.8051744 shares in Lotte Confectionery, which will be the surviving entity.

Lotte Confectionery is most known for its Xylitol gum products, Pepero and ice creams, such as Jaws Bar, Watermelon Bar and World Cone. Lotte Foods sells ice creams including Piggy Bar and GooGoo Cone, Pasteur Milk and Cantata coffee.

Lotte Corp. is the largest shareholder for both companies, owning 48.42 percent of Lotte Confectionery and 40.43 percent of Lotte Foods. After the two companies merge, Lotte Corp. will have a 67.45 percent stake in the surviving entity.

The two companies have similar businesses, and the merger is expected to boost overall market share.

Binggrae — including Haitai Icecream, acquired by Binggrae in 2020 — has 40.5 percent of the ice cream market, Lotte Confectionery 30.7 percent and Lotte Food 14.8 percent.

Post-merger, Lotte Confectionery will have 45.5 percent of the market.

The merger is expected to help Lotte Foods branch out abroad. The company mostly focuses on local sales, compared to Lotte Confectionery, which has eight overseas subsidiaries in countries including China, Singapore and India.

The online shopping malls of the two will be merged. The surviving entity will build a new logistics center and increase online sales to 25 percent of total by the end of 2025, compared to 10 percent now.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]