Lotte Confectionery and Lotte Foods Merger Officialized... Creation of Korea's 2nd Largest Comprehensive Food Company

[Asia Economy Reporter Eunmo Koo] The merger resolution between Lotte Confectionery and Lotte Foods was approved at the extraordinary general meeting of shareholders held on the 27th, formalizing the merger of the two companies. Accordingly, the two companies plan to complete the merger on July 1, with Lotte Confectionery as the surviving entity absorbing Lotte Foods.

The two companies plan to integrate their respective ice cream divisions through the merger. The merged entity's market share in the ice cream sector will be approximately 45.2%, surpassing the combined market share of Haitai and Binggrae (40.2%), making it the number one company. Lotte Confectionery explained, "We will enhance efficiency by reducing overlapping production and logistics lines and apply a selection and concentration strategy to our brands to improve profitability."

Industry insiders expect synergy effects from the merger between Lotte Confectionery, which focuses on consumer goods (B2C), and Lotte Foods, a supplier of oils and food ingredients (B2B). Specifically, from Lotte Foods' perspective, it is anticipated that Lotte Confectionery's B2C expertise can be applied to the home meal replacement (HMR) business.

The two companies also plan to integrate their respective e-commerce organizations, aiming to increase the online sales ratio from the current less than 10% to over 25% by 2025. The merged entity also intends to venture into various new businesses. Currently, Lotte Confectionery is showing interest in finding new growth engines, such as the alternative protein market using crickets.

A Lotte Confectionery official stated, "We will strive to complete the integration work as soon as possible," adding, "With this merger, Lotte Confectionery will stand tall as a global food company with sales reaching 3.7 trillion won."

The Lotte Confectionery shareholders' meeting was held with 89.3% of shareholders holding voting rights attending out of a total of 6,416,717 issued shares. All agenda items, including the merger, amendments to the articles of incorporation, and director appointments, were approved as originally proposed. Notably, the agenda to convert approximately 360 billion won of capital reserves into retained earnings was approved.