Korea’s Lotte to acquire 100% of Havmor Ice Cream for Rs1,020 cr

24 Nov 2017


South Korean Lotte Confectionery is all set to fully buy 100 per cent of India's Havmor Ice Cream Ltd (HIL) for Rs1,020 crore, opening a road for the $80 billion Lotte Group into the Indian ice cream market with 1.3 billion consumers.

The 73-year-old Havmor will continue to run its restaurant business.

The acquisition marks the entry of Lotte, the maker of Choco Pie confectionery brand, into India's growing ice-cream market. The share purchase agreement was finalised on Wednesday and the deal will be closed over the course of next 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 as saying by PTI.

Havmor is currently the fifth largest ice-cream player in the country and has around 8 per cent share in India's Rs4,000 crore organised ice cream market.

"We were not actively looking at exiting the ice-cream business. However, we were happy to consider it (the sell-off) if somebody could do justice to Havmor brand and take it to the next level. And that's where Lotte came into the picture," said Havmor Ice Cream managing director Ankit Chona.

Havmor has been the fastest growing ice cream company across India for the past five years. Valued at Rs450 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 20 restaurants.

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

Ankit Chona will continue to run Havmor's restaurant business and will help Lotte during the transition period. Havmor operates 15 restaurants in cities such as Ahmedabad, Vadodara, Surat and Rajkot. "The restaurant business will be run by me from the same office and we will be working with Lotte to help grow the ice-cream business. I am not going to walk out of the company any time soon," he added.

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 Indian ice cream market 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 for northern India. This will now help Lotte target a bigger market than just northwestern India where Havmor has a large share of the market.

Lotte Confectionery 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 the choco pie market in India reached 90 per cent last year.

Lotte has brands like Eclairs, Coffee Bite, and Lacto King in its portfolio, some of it acquired when it acquired Parry's Confectionery from Murugappa Group on its arrival in India.

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

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