South Korea: Hite Brewery Co., South Korea's largest beer producer, announced on April 15 it began due diligence on distiller Jinro Co. Friday afternoon, according to Asia Pulse. A consortium led by Hite was selected on April 1 as the preferred bidder for Jinro, the country's largest maker of the distilled liquor "soju," after it offered a bid of 3.2 trillion won (US$3.16 billion).
"We plan to finish the due diligence within four weeks," the official who declined to be named told Yonhap News Agency over the telephone. Jinro's labor union accepted the due diligence, after earlier saying that the sale will only benefit foreign funds like Jinro's main creditor Goldman Sachs. "Though we have not changed our position that the overly expensive acquisition price could lead to a `drain on South Korea's national wealth,' we don't oppose the acquisition itself," the union said in a press release.
Hite applied to an antitrust watchdog, the Fair Trade Commission, on Wednesday for approval of its acquisition of Jinro Co. Its judgment could take one month or an additional 90 days if the related investigation is extended. However, Jinro's labor union called for a speedy screening of the approval.
Hite controls 58 percent of the domestic beer market, while Jinro enjoys a 55-percent hold on the soju market. Hite also runs a soju-making subsidiary, but it has a meagre 2-percent share of the national market.
If things go smoothly, the consortium, whose bid represents the highest-ever offer for a domestic company, is expected to be able to conclude a formal contract by July at the earliest. Should the negotiations with Hite fall through, however, consortiums led by CJ Corp, Doosan Corp. and Taihan Wire are next in line to negotiate a takeover deal.
Jinro, which controls a 55-percent share of the market, has been in court receivership since May 2003, but its business performance remains strong. It posted an operating profit of 221.9 billion won on sales of 734.7 billion won last year.
Soju is one of the country's most popular liquors. An average of 86 bottles of soju are drunk for every South Korean adult each year, according to government statistics.
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