LOTTE Corporation invests into confectionary "Rakhat" JSC
Almaty, Kazakhstan, July 2, 2013 – "Rakhat" JSC, Kazakhstan's leading confectionery and LOTTE Confectionery, leading confectionery in South Korea, officially announced that LOTTE Confectionery has entered into agreement to acquire approximately 76% of "Rakhat" JSC outstanding shares.
The acquisition is subject to approvals customary for such transactions.
This business transaction contributes to further development of mutual beneficial economic and cultural relations between Kazakhstan and South Korea, perspectives of bilateral cooperation have reached new qualitative level after official visit of South Korean President Lee Men Bak to Kazakhstan in September 2012 upon invitation of Nursultan Abishevich Nazarbayev President of the Republic of Kazakhstan.
"Rakhat" JSC started its operation in 1942 and today it is Kazakhstan's largest confectionery with leading positions in the market of chocolate, sweet and flour confectionery, its annual turnover was about 29.4 billion KZT (approximately 197 million U.S. dollars) in 2012, Headquarters of the company is located in Almaty, and company's production facilities are located in such cities as Almaty and Shymkent; total number of employees is about 3,000 people. "Rakhat" JSC has an extensive distribution network throughout Kazakhstan, as well as in other countries such as Russia, Central Asia, Germany. The company continues to grow thanks to the high recognition of its brand and excellent quality of its products.
LOTTE Confectionery is subsidiary of the 5th largest conglomerate in South Korea –LOTTE Group, being the leading confectionery in South Korea, its headquarters are placed in Seoul. LOTTE group includes 79 subsidiaries; its total annual turnover was $ 75 billion in 2012, with double-digit yearly growth. LOTTE group was originally established in 1967 as Confectionery Company and later on it was expanded into other industries such as food processing, retailing, tourism, construction and petrochemicals. Over the last few decades LOTTE Confectionery continues to hold position of No. 1 with the largest share of confectionery market in South Korea, as well as it is developing new markets outside South Korea in line with its strategic goal to become the confectionery company No. 1 in Asia.
Mr. Yong Su Kim, President of LOTTE Confectionery, said: "LOTTE Confectionery is very excited to establish its strong presence in Kazakhstan's confectionery market upon acquisition of "Rakhat" JSC. This transaction is the largest acquisition of LOTTE Confectionery since our acquisition of Parry'sConfectionery in India in 2004 and it will enable us to expand our presence significantly in the fast growing markets of Kazakhstan and Central Asia. "Rakhat" JSC is the leading company in Kazakhstan with very strong brand, excellent reputation for products quality among the consumers and well-organized distribution network. We plan to help Rakhat brand to reach the next level of development, while maintaining high quality of products through scientific developments and technologies, as well as quality control system used in LOTTE Confectionery. We are very proud that this transaction will further strengthen economic, business and cultural cooperation and relations of Kazakhstan and South Korea".
Rakhat JSC equity capital value during transaction was estimated for about 157 million US dollars that makes approximately 43.5 US dollars per share after recalculation (about 6.5 thousand KZT) based on 3.6 million shares - total number of outstanding shares, thus representing about 30% bonus to the share value at Kazakhstan stock exchange (trade code-RAHT) as of July 1, 2013
Such acquisition is subject to approvals customary for such transactions (including state authorities), in this respect acquisition is expected to be closed in the second half of 2013. After obtaining relevant approvals and completing the transaction, LOTTE Confectionery plans to make an offer to minority shareholders of "Rakhat" JSC to acquire remaining 24% of shares based on the terms and conditions stipulated by Kazakhstan's legislation.
HSBC Bank is an exclusive financial advisor of "Rakhat" JSC controlling group of shareholders in this transaction, legal company MorganLewis is their legal advisor in the transaction. SamilPricewaterhouseCoopers (South Korea), Kim&Chang and Salans are advisers of LOTTE Confectionery in this transaction.