“Let us Drink Jinro”

Heated competition has risen among related companies to acquire this year’s biggest domestic merger and acquisition (M&A) article for sale, Jinro.

As the public announcement for the sale of Jinro is anticipated for the end of this month the participation of such companies as Taihan Electric Wire and Hite Brewery in the acquisition has been publicly announced, and Lotte is composing a consortium with several companies.

According to information from Jinro and liquor business circles on January 9, Merrill Lynch, the main company administering the acquisition, is planning to announce a public sales announcement with such contents as the concrete sales schedule and method, and will accept documents of acquisition intent no later than the end of this month after finishing the operation of actually valuating the corporate value of Jinro.

Choi Seok-moon, managing director of Jinro, said, “Soon we will release a public sales announcement after undergoing related procedures such as obtaining the court’s approval.” Accordingly, the movements of the 10 or so companies that have publicly announced intentions of acquisition or have been secretly operating on it are growing busier.

Taihan Electric Wire, which has in its possession 470 billion won worth of Jinro bonds, is employing the strategy of using its position as the company’s largest creditor and has composed an acquisition team with foreign security companies last month.

At the end of last month, Doosan sold all shares of Doosan CPK to an American joint-venture company, separated Burger King and KFC, which existed as divisions in the past, from itself and has started preparation operations for the acquisition of Jinro such as increasing its financial soundness and securing liquid capital.

Park Moon-deok, president of Hite Brewery, publicized intentions to participate in the acquisition through a recent interview with the press that “because Jinro is a sound company with high profits, we will take part in the acquisition hoping to generate synergy.”

With subsidiary Haitai Beverage in the lead, Lotte is discussing composing a consortium with such companies as Japan’s Asahi Breweries.

Additionally, it has been conveyed that companies such as Hite Brewery, CJ, Dongwon F&B, CVC Capital and New Bridge Capital are joining domestic and foreign investment funds to participate in Jinro’s acquisition.

Meanwhile, as the competition is running high, the ‘ransom (acquisition price)’ of Jinro is skyrocketing. In the recent issue of the British international finance magazine IFR, Jinro’s corporate value was rated at three trillion won.

Jae-Seong Hwang jsonhng@donga.com