South Korea: Hite Brewery sees growing opposition to Jinro takeover
Hite Brewery Co., South Korea's biggest beer producer, is facing mounting opposition to its acquisition of top distilled liquor maker Jinro Ltd. a week ahead of a ruling on the deal by the nation's antitrust watchdog, Asia Pulse posted on July 14.
A consortium led by Hite signed an agreement in early June to buy Jinro for 3.4 trillion won (US$3.25 billion). The Fair Trade Commission is slated to issue a verdict next Wednesday on whether the takeover violates the country's antitrust law. ADVERTISEMENT
Opponents voice concerns that with the acquisition, Hite could monopolize the domestic liquor market and squeeze smaller rivals out of the market.
Hite controls some 58 % of the beer market in South Korea, and Jinro controls about 55 percent of the "soju" market. Soju is a popular distilled liquor consumed mainly by ordinary Koreans.
"If Hite gets approval for the acquisition, it will take control of the nation's liquor distribution network," said Kim Jun-young, president of No. 2 beer maker Oriental Brewery Co., told reporters Wednesday.
Hite has already expressed an intention to expand its market share using Jinro distribution channels in the Seoul Metropolitan area, Kim claimed.
Oriental Brewery is controlled by the world's top beer maker InBev, which holds a 95 percent stake in Oriental Brewery. InBev acquired the stake in 1998.
Oriental is not alone in opposing the deal. The city council of Gwangju, 329 kilometers southwest of Seoul, issued a statement against the acquisition on the same day, arguing that it will have a negative impact on the regional economy. Plants of Oriental Brewery and Bohae Soju are located there.
Hite brushed aside such concerns, saying it expects a "reasonable" ruling from the watchdog.
"Their concerns are totally groundless, because what matters now is not distribution channels but brand power," it said.
Jinro went under court receivership after it plunged into a cash crunch because of heavy debts during the 1997-98 Asian financial crisis.
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