South Korea: Hite Brewery Co. is to sign a formal agreement on the acquisition of distiller Jinro Co.

South Korea's largest beer maker, Hite Brewery Co., is to sign a formal agreement on the acquisition of distiller Jinro Co. in about two weeks, a spokesperson of the said on May 6, according to Asia Pulse communication.

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 bidding 3.2 trillion won (US$3.16 billion). "As Hite will finish its due diligence on Jinro today, the main contract may be concluded around May 23," the senior official, who declined to be named, told The Yonhap News Agency over the telephone.

"Hite is supposed to pay a 10-percent contract fee, and the exact payment will be decided through negotiations after the due diligence," he added.

Since mid-April, Hite has been been carrying out the due diligence on Jinro, the most valuable South Korean company up for sale this year.

Hite filed an application on April 13 with South Korea's antitrust watchdog, the Fair Trade Commission, for approval of the Jinro acquisition. The watchdog's judgment could take one month or an additional 90 days if the related investigation is extended.

Hite controls 58 per cent of the domestic beer market, while Jinro holds a 55-percent share of the market for soju. Hite also runs a soju-making subsidiary, but it only has a meager 2-percent share of the national market.

Should the negotiations with Hite fall through, consortiums led by CJ Corp, Doosan Corp. and Taihan Wire are next in line to negotiate a takeover deal.

Jinro 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.

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