Lotte Confectionery board approves Lotte Foods merger

Packs of Lotte Confectionery ice creams Jaws Bar and Screw Bar are displayed at a discount mart in Seoul. [YONHAP]

Lotte Confectionery confirmed Friday it will merge with Lotte Foods on July 1.

The companies announced that they planned to merge in March, with Lotte Confectionery’s board of directors officially approving the move during a meeting on Friday.

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

Lotte Holdings is the largest shareholder of both companies, with 48.42 percent of Lotte Confectionery and 40.43 percent of Lotte Foods. Post-merger, Lotte Holdings will still be the largest shareholder with 45.66 percent of the surviving company.

Current Lotte Confectionery CEO Lee Young-goo will remain the CEO. Lotte Foods CEO Rhee Jin-sung will become head of the home meal replacement (HMR) division under the surviving entity. HMR refers to substitutes for home-cooking that includes ready-to-eat meals and meal kits.

The new company will focus on HMR products. Lotte Foods spent 93 billion won ($74 million) building additional HMR production lines at its plant in Gimcheon, North Gyeongsang, completing construction last April. The new entity will be able to use Lotte Foods’ manufacturing plant.

The merger is expected to give Lotte a lead in the ice cream market.

Binggrae — including Haitai Icecream, acquired by Binggrae in 2020 — had a 40.2-percent share of Korea’s ice cream market as of the first half of 2021. Lotte Confectionery had 30.6 percent and Lotte Foods 14.7 percent, which will total a market share of 45.2 percent for the surviving entity.

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