Lotte aiming at Kolsons treats

Aiming to become one of the top ten business groups of Asia by 2018, the South Korean conglomerate Lotte has been out on a buying spree lately.
While shopping around global super stores last year, the groups subsidiary, KP Chemical could not resist adding Pakistan PTA to its cart. However, it seems that a handsome return from Lotte PTA has compelled the group to pick another company placed on Pakistans shelf.
Realising that Pakistan feeds 180 million mouths daily, this time, one confectionary company, K.S. Sulemanji Esmailji & Sons (Pvt) Ltd., caught Lottes eye This is a confectionary company that sells pasta, cereals, biscuits, chips and snacks, and captures around 29 percent share of Pakistans confectionery market
The acquiree, who tacitly declined to provide information about the deal, is expected to get around $17.9 million in exchange for a 69.45 percent stake, according to a foreign newspaper agency.
Since the value of the local firm is estimated around $25 million, with around $30 million sales last year, it seems that the discount price also induced the purchaser into the deal.
The future of Lotte Confectionery in Pakistan looks promising. It has been estimated that food consumption industry in Pakistan will grow by 36 percent till 2014, according to Business Monitor International, a leading and independent information provider of country risk and industry research headquartered in London.
In keeping with the groups ongoing efforts to increase its presence in the overseas market, its existence in Pakistan would expand the acquirers reach to Afghanistan and Central Asian countries.
Investment by Lotte holds great importance for Kolson since the acquirers strong financial health and technological know-how will continue to support its operations in future and will pave way for more future investments in the confectionery sector in Pakistan.
A good case in point is Lotte India, as lately it has set up a second confectionery manufacturing facility in Chennai by investing around $70 million.
Since Kolsons sales portfolio is skewed towards pasta, cereals and snacks, the acquirers diversified product mix will add new products into Kolsons sales mix, such as gums, soft cakes, chocolates, ice cream, etc.
Lottes growing interest in local industries signals that it might develop a business case for further investment in a few other sectors in Pakistan. However, this time, the potential target would certainly be retail chain businesses, mainly marts and super stores - a sector which is at a growing stage and is still highly untapped.