South Korean fashion house LF Corp. is working to acquire edible laver maker Haewoochon Co. under court management, a move indicating its foray into the food industry to compensate for its struggling domestic fashion business.
According to investment banking sources on Wednesday, Haewoochon reported LF as its preferred negotiator for buyout to the bankruptcy court. The offered price is reportedly 4.2 billion won ($3.9 million), nearly double the liquidation value of 2.3 billion.
But whether the deal will go through remains questionable as LF does not have that much cash in hand.
Haewoochon was founded in 1982 as a company specializing in the production of seasoned laver - dried seaweed roasted with sesame oil and seasoned with salt that is a popular side dish in Korea. It became Korea’s second company in the industry to pass the Hazard Analysis and Critical Control Points (HACCP) food safety standard and grew to become a household name. But its business took a sharp hit in 2016 when its holiday gift sales fell far below expectations and its chief executive was prosecuted on charges of food safety violations. The company eventually filed for bankruptcy in February this year and has been on the lookout for a suitable buyer.
Haewoochon has been a leading supplier for major companies and cafeterias and is likely to make a fast comeback once it regains market confidence, said an IB official.
The food company’s appeal also comes from the rapid growth of Korean dried laver exports in recent years. Gim, as it called in Korea, has gained global recognition as a healthy, low-calorie snack and is now being exported to more than 100 countries, with shipments growing at an average 20 percent rate per year. According to Korea Customs Service, gim exports reached a record-high of $450 million in the first 10 months of 2017. Japan is the largest importer of Korean gim, followed by China, the United States, Thailand and Taiwan.
LF reported its operating profit for the first quarter on a consolidated basis was 29.3 billion won, up 21.3 percent on year. Sales were up 7.4 percent at 409.4 billion won.
LF shares closed Thursday 0.35 percent higher at 28,950 won.
By Park Eun-jin and Kim Hyo-jin
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