The South Korean retail giant Lotte Group will acquire Doosan’s spirits-making division for 503 billion won, Doosan said Tuesday, in a move that will spur Lotte’s beverage business.
Lotte Chilsung Beverage, the country’s top soft drinks brand, was picked late last month as the preferred buyer for the maker of the traditional South Korean spirit, soju, beating four other suitors.
The $386 million acquisition will enable Lotte to become one of the biggest makers of soju, a clear liquor distilled from potatoes and grains, and will heat up the competition with a larger domestic rival, Jinro, a unit of the biggest South Korean beer maker. The acquired liquor business generated 341.9 billion won in sales of soju, wine and other liquors in 2007, according to Doosan’s data.
Doosan told the Korea Exchange in a filing that the sale would help it lower debt and transform into a holding company, as well as secure funding for new businesses.
It has been trying to shift its focus from food and beverage to heavy industry since it bought a domestic heavy machinery equipment maker and Bobcat, the world’s top compact construction equipment firm.
Doosan shareholders who oppose Lotte’s acquisition of its business can ask the company to buy back their shares at 89,214 won each, or at a 3.4 percent discount to the Tuesday close.
Shares in Lotte gained 2.2 percent to close at 875,000 won before the disclosure, slightly outperforming the wider market’s 1.8 percent rise. Lotte plans to begin operations of its liquor unit in March.