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Rediff News  All News  » Business » Korea's Lotte to buy 60% in Parry Confectionery

Korea's Lotte to buy 60% in Parry Confectionery

January 17, 2004 11:49 IST

The Rs 5,000 crore (Rs 50 billion) Chennai-based Murugappa Group on Friday announced that it has signed a Rs 64.48 crore (Rs 644.8 million) share purchase agreement with Lotte Confectioneries of Korea, to transfer its 60.39 per cent stake in Parry Confectionery Ltd.

Lotte will be making an open offer to the public to acquire the 754,258 shares, representing 20 per cent stake in PCL at Rs 283.25 aggregating to Rs 21.36 crore (Rs 213.6 billion).

The agreed purchase price for Murugappa Group's holding in PCL is fixed at Rs 283.12 per share aggregating to Rs 64.48 crore in cash. The transfer is subject to approval from the Foreign Investment Promotion Board, which is expected in the next three months.

Announcing the deal in Chennai, M V Subbiah, chairman of Parry Confectionery Ltd, said, "With the entry of multinationals in the Indian confectionery market over the last decade, we could not support further investments. Lotte has deep pockets for advertising and promotions. The decision to divest the group's stake in PCL is in the best interest of shareholders "

Subbiah added that a member of the Murugappa group would continue to hold a place in the company's board even after the entire stake of the Murugappa Group is bought by Lotte.

Lotte will pay Rs 500,000 per annum to EID Parry as royalty for using the Parry brand of PCL.

The Parry brand is owned by EID Parry.

Lotte executives said they were happy with the price at which they got to enter the Indian confectionary business. Soo-Kil Han, president & CEO, Lotte Confectionary Co, said, "We would be investing in our Indian operations and in the short run use only the PCL brands in India. In the long run we would bring Lotte international brands into India."

The Murugappa group decided on the consideration for the transaction in consultation with KPMG. Lotte for the time being has not decided to delist the company from the stock exchange.

BS Bureau in Chennai