Sales Reach 4 Trillion Won as a Comprehensive Food Company... Lotte Confectionery and Food Merge

Completion in July after May's General Meeting... Confectionery Absorbs Food Division
Official Integration to Create a Mega Food Company... Second Largest After CJ CheilJedang

Reducing Overlapping Management Elements, Efficient Use of Human and Physical Resources
Plans to Improve Financial Structure and Profitability
"Expecting Business Synergy and Expansion through Shared Sales Network"
Top Priority for Integration is Ice Cream Division... Forecast to Reclaim Market Leadership

[Asia Economy Reporter Eunmo Koo] With the merger of Lotte Group's food affiliates Lotte Confectionery and Lotte Foods, a comprehensive food company with combined sales approaching 4 trillion won has been created. The integrated corporation plans to consolidate overlapping businesses to reclaim the leading position in the ice cream market lost to Binggrae, while accelerating new business and overseas operations.

According to the Financial Supervisory Service's electronic disclosure on the 24th, Confectionery and Foods held a board meeting on the 23rd and resolved to merge. The two companies plan to complete the merger on July 1 after shareholder approval on May 27. This merger will be carried out in the form of Confectionery absorbing Foods.

Once officially integrated, the two companies will become a mega food company with annual sales of about 3.7 trillion won as of last year. It will be the number one in the confectionery and ice cream sectors and the second largest food company overall after CJ CheilJedang. The integrated corporation's business areas are expected to cover the entire food industry, including ice cream, bakery, health functional foods, home meal replacements (HMR), meat processing, dairy products, coffee, and food ingredients.

Through this merger, Confectionery expects to improve operational efficiency by reducing overlapping management elements and efficiently utilizing human and material resources to establish a unified management system. Ultimately, the company plans to improve its financial structure and profitability. A Confectionery official said, "This merger is an integration between affiliates in similar business areas," adding, "We expect to create business synergies such as expanding the business base through sharing sales networks."

Sim Eunju, a researcher at Hana Financial Investment, said, "After the merger, efficiency is expected to be maximized through the priority integration of ice cream, e-commerce, and global sectors," and evaluated, "Considering that the two companies have many overlapping raw materials such as dairy products, significant cost reductions are expected even if only purchasing efficiencies become visible."

Confectionery is expected to first integrate the overlapping ice cream organizations after the merger. Through this, it plans to regain the leading position in the ice cream market that was lost to Binggrae. Previously, Binggrae became the industry leader by acquiring a 132.5 billion won stake in Haitai Confectionery's ice cream business division in 2020 and incorporating it as a subsidiary. According to food industry statistical information, as of the first half of last year, Binggrae led the domestic ice cream market with a combined market share of 40% (Binggrae 28.0% + Haitai 12.3%). However, with this resolution, the merger of Confectionery (30.6%) and Foods (14.7%) will raise Confectionery's combined market share to over 45%, changing the leadership position.

New business and overseas operations are also expected to accelerate. Until now, the two companies have faced difficulties in aggressively expanding similar new businesses such as senior food and health foods, but through the merger, they are expected to strengthen brand competitiveness by building a food portfolio covering the life cycle from infant formula to silver food. Additionally, Foods, which has been focused on the domestic market, is expected to expand its footprint by utilizing Confectionery's global network to increase infant formula exports in the future.

This content was produced with the assistance of AI translation services.