Lotte Confectionery is part of the Lotte Group, KoreaÆs fifth largest diversified business group. Lotte operates an extensive retail network in South Korea comprising 25 department stores, 56 hypermarkets, 79 supermarkets, 1,750 convenience stores, seven duty free shops, 17 fashion outlets and six fashion/household goods stores. The confectionery business started its existence in Japan. The current acquisition is being effected by an investment company in which Lotte Confectionery Korea and Lotte Japan will both have a stake. Lotte will buy 100% of Chocolaterie Guylain, which will become its 45th subsidiary.
Guylian has sales networks in nine markets spanning Europe and the US and is best-known for its Belgian chocolate seashells in dark, milk and white chocolate with hazelnut praline filling. The brand currently derives the majority of its sales in Europe and LotteÆs plans to extract value out of the acquisition include a more aggressive push into Asia. The deal will also provide Lotte with an established base in Europe. The companies say that Lotte also sees synergies in GuylianÆs strong branding in the premium-boxed chocolate segment and duty free stores positioning.
Lotte was advised by Mizuho Bank of Japan, while the shareholders of Chocolaterie Guylain were advised by Lazard.
ôThe partnership with Lotte is in line with our strategy to make the next quantum leap in the confectionery industry and to take full advantage of the potential of the everyday confectionery market and fast growing Asian markets," says Guylian managing director Carl Krefting, in a written statement.
The deal is the latest in a series of outbound acquisitions from Asia and specifically from Korea. In July 2007 Korean heavy equipment manufacturer Doosan acquired Ingersoll RandÆs bobcat, utility equipment and attachments businesses in the US for $4.9 billion in the largest ever outbound M&A deal by a Korean company. Most bankers predicted at the time that the deal would herald a wave of outbound activity from a country that historically has chosen domestic diversification, rather than cross-border acquisitions in related fields, as an avenue to deploy surplus cash. The Doosan deal was followed in October last year by an $800 million outlay by KoreaÆs STX Corp for shipbuilding firm, Akers Yards, Norway.
Korean companies are being helped in their ambitions to go global by a local banking system with the willingness and ability to finance their forays. With valuations in subprime-affected markets looking attractive and diminished competition from financial sponsors who are not readily finding the leverage necessary for them to fund their deals, the trend seems set to gain momentum.
¬ Haymarket Media Limited. All rights reserved.
