Eyes on Haitai Confectionery's links with Binggrae Binggrae bought convertible bonds of Crown Confectionery in 2008, which was seen as a hostile M&A attempt

Translated by Kim So-in 공개 2020-04-07 08:00:04

이 기사는 2020년 04월 07일 08:00 더벨 유료페이지에 표출된 기사입니다.

Haitai Confectionery & Foods’ sale of its ice cream business to Binggrae is drawing attention from M&A market watchers as the deal represents an extraordinary relationship between the two rivals.

Haitai Confectionery will sell an entire 100 percent stake in Haitai Ice Cream to Binggae for 140 billion won, sources familiar with the matter said on April 1. Binggae made its initial payment of 14 billion won on March 31.

What is notable is that this is not the first time Haitai Confectionery and Binggrae met with each other in the M&A market.

In October 2008, Binggrae announced that it bought convertible bonds (CB) of Crown Confectionery that were owned by the Korea Securities Financial Corporation on the over-the-counter (OTC) market, which converts into more than 370 thousand shares, or 21.29 percent, of Crown Confectionery.

At that time Crownhaitai Holdings chairman Yoon Young-dal was the largest shareholder of Crown Confectionery holding 23.81 percent of shares. If Binggrae converts all convertible bonds into shares, it could be seen as a move that may lead to a dispute over management rights depending on which company Lazard Asset Management will side with. Lazard was the second largest shareholder of Crown Confectionery with 15.62 percent of shares. In this regard, Crown Confectionery was reportedly quite uncomfortable with Binggae’s unexpected purchase of convertible bonds.

“At that time, market insiders viewed Crown Confectionery took Binggae’s purchase of convertible bonds as a hostile takeover attempt,” said an industry source, adding, “After that, Crown Confectionery saw the necessity to overhaul its ice cream business and sought for diverse ways to do that.”

Binggrae exercised its conversion rights in 2009 and secured 5.12 percent stake, or 75.5 thousand shares, in Crown Confectionery. In Mach 2017, Crown Confectionery was split into Crownhaitai Holdings, a holding company, and Crown Confectionery, a business unit. Binggrae exchanged its stake in Crown Confectionery into new shares of the holding company to increase its stake to 7.67 percent.

Binggae is currently the third largest shareholder of Crownhaitai holdings with 7.67 percent of shares, after Dura Foods (38 percent) owned by Crownhaitai Holdings president and Yoon Young-dal (11.32 percent).

With Binggrae acquiring Haitai Ice Cream, the tensions between two companies are likely to ease. Each company plans to concentrate more on its core businesses. Haitai Confectionery will use the proceeds from the sale of its ice cream business to focus on other food businesses while Binggrae aims to dominate the ice cream industry by increasing its market share.

Haitai Ice Cream makes products that are familiar to customers, such as Bravo Cone, Nougatbar and Babamba. Haitai Ice Cream is one of the big 4 companies in the country’s ice cream industry, along with Lotte Confectionary, Lotte Food and Binggrae. The company has been seeking new growth engines since 2018.

(By reporter Rho Ar-rum)
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