South Korean Lotte Confectionery buys Havmor Ice Cream for Rs 1,020 crore

Lotte Confectionery is all set to buy 100 per cent stakes in Indian Havmor Ice Cream Limited (HIL) for Rs 1,020 crore. This opens the 1.3-billion-consumers-strong Indian ice cream market for the South Korea-based Lotte.

The share purchase agreement was finalised on Wednesday and the rest of the Rs 1,020 crore deal will be shut over the course of the following week. The deal was overseen by Havmor's financial advisor KPMG, Veritas Legal, and Dhruva Tax Consultants. Following the deal, Lotte will have the resources to operate in the Indian ice cream market.

"It's a brand that we have nurtured with our team for over 73 years. But we believe that Lotte Confectionery is the right brand to take the company to the next level," HIL Chairman Pradeep Chona was quoted in a PTI report.

Havmor has been the fastest growing ice cream company across India for the past five years. Valued at a total of Rs 450 crore, the company presently operates a large parlour network across 14 states in India, and has engaged 30,000 dealers. Apart from this the company also runs a chain of ice cream cafes named Huber and Holly, 60 eateries and a chain of 20 restautants.

While Havmor will continue to run the ice cream business on behalf of Lotte for now, it will also divert its attention to expand its other businesses.

The company has a portfolio of 150 products manufactured at its two manufacturing facilities. The 3.5 to 4 per cent market stake Havmor controlled in the ice cream scenario in India had reportedly made it a sought after option for multinationals to invest in.

The two manufacturing facilities run by Havmor are also looking at capacity expansion from 2,50,000 litres per day to 3,50,000 litres per day, which was supposed to help the company cater to northern India. This will now help Lotte target a bigger market than just north-western India where Havmor controls most of the market.

On the other hand, Lotte Confectionery has a valuation of $80 billion. It was the first Korean company to foray into India back in 2004. Since then, it has established choco-pie factories in Chennai and Delhi. Lotte's market presence in choco pie market in India reached 90 per cent last year. Apart from Choco Pie, Lotte has brands like Eclairs, Coffee Bite, Lacto King, among others on its portfolio, some of it acquired when it acquired Parry's Confectionery from Murugappa Group on its arrival in India.

The South Korea Lotte Group has operations in varied sectors like tourism, heavy chemicals, construction and machinery, communication and electronics, trading services, etc. Lotte Confectionery is the flagship company of the Group in food and beverages segment.