Lotte’s sweet tooth bites 60% off Parrys for 65 crore

Lotte’s sweet tooth bites 60% off Parrys for 65 crore

Author | exchange4media News Service | Saturday, Jan 17,2004 7:47 AM

Lotte’s sweet tooth bites 60% off Parrys for 65 crore

Korean candy maker Lotte Confectionery Co Ltd has acquired 60.39 per cent stake of the Chennai-based Murugappa group in Parrys Confectionery Ltd (PCL) for a consideration of Rs 64.47 crore. The deal, which was in the offing for a while, was formally announced by the companies here on Friday. Merchant banker KPMG brokered the deal.

Addressing a press conference here, group patriarch and company chairman MV Subbiah said that the Murugappa group has signed a share purchase agreement (SPA) with Lotte on Friday for the sale of its entire stake in PCL for a consideration of Rs 283.12 per share. This translates into a total consideration of Rs 64.47 crore. The sale is subject to various approvals and formalities. The SPA was signed by EID Parry on behalf of other group firms.

EID Parry was the single largest stakeholder in PCL with a holding of 28.49 per cent stake with Murugappa group’s investment arm Santhanalakhmi Finance holding 15.04 per cent stake. The remaining stake of the group was held by four other group subsidiaries, Cholamandalam Investments, Tube Investments, TI Diamond Chain and Carborundum Universal. Mr Subbiah said the decision to sell the group stake was taken in view of the benefit the company will have in the long run. PCL will now have improved access to resources critical for nurturing and growing brands, besides the opportunity to diversify into new products from the product portfolio of Lotte. The company can also enter related segments and leverage and expand the distribution channel. It can also consider introducing Lotte’s global products which may have markets outside India. It will also provide PCL to fully utilise its plant capacity.

With foreign brands making wave in the confectionery market, PCL, the 100-year old candy maker, has been having a troubled time for a while. The company has two manufacturing facilities in Tamil Nadu which were running well below their installed capacity. It has made some attempts to reposition its brand and introduce a new product range.

PCL clocked a turnover of Rs 22.9 crore on the quarter ended September 2003 and posted a net loss of Rs 10 lakh. PCL stock closed on BSE Rs 239.50, up by eight per cent on Friday.

Tags: e4m

Write A Comment