Press Release

Acquisition of CCKBC Finalized

Date 2007.10.24

LG H&H announced that it has acquired Coca-Cola Korea Bottling Company (CCKBC) from Coca-Cola Amatil for the price of 385.3 billion won.

LG H&H has signed an agreement with Coca-Cola Amatil for the acquisition of CCBKC on August 17. As all acquisition procedures stated in the agreement are fully completed, the deal is now concluded.

The total sale price was initially projected at 400 billion won based on the taking on of CCBKC’s 120 billion won in debt. However, in the process of the acquisition procedures, the deal was set at 385.3 billion won, which was 14.7 billion won below the initial estimate.

As for the details of the acquisition price, based on the settling of accounts as of the end of June 2007, the total sale price was finalized at 385.3 billion won. As a result of an improved financial situation due to a rise in CCKBC’s operating profit, net borrowings were reduced by about 50 billion won from 120 billion won to 71.7 billion won, leaving a net investment of 313.6 billion won.

Of the net investment, 31.5 billion won or about 10% has been deposited into an HSBC escrow account to guarantee the fulfillment of the seller’s obligations. The amount actually remitted to Coca-Cola Amatil is 282.1 billion won.

LG H&H plans to launch various premium beverages, including bottled water, coffee drinks, chilled juice and vitamin beverages, to raise the status of the Coca-Cola business.

 

** Achievements in the acquisition of CCKBC

- The acquisition price was below the price at the time the formal agreement was signed on Aug. 17:

The total acquisition price, which was initially anticipated to be about 400 billion, was decreased by 14.7 billion won to 385.3 billion won.

- Reduction of CCKBC’s debts:

Thanks to a rise in operating profit, debts were reduced by 48.3 billion won from 120 billion won at the end of June 2006 to 71.7 billion won at the end of June 2007.

- Rigorous company management system verified:

Findings from due diligence showed that CCKBC’s accounting system is precise and internal systems are perfectly operational. The company was in a sounder state than initially predicted.

- Soundness of CCKBC labor confirmed:

Although the CCKBC labor union is known to be hardline to the outside, this is due to cultural differences in relationships with foreign top executives. When they were contacted in the process of due diligence, they were engaged in sound labor union activities.

- Increased real estate assets

As the site for CCKBC’s Hanam logistics warehouse that was initially expected to be sold has not been, assets will increase by over 10 billion won. In addition, the price of the 50,000-pyeong Yeoju factory went up due to a development boom in nearby areas, and assets are thus expected to increase.

 

** Plans to Launch Various New Beverages

- Bottled water: Through discussions with Jeju Provincial Development Corporation, which produces Jeju Samdasoo, LG H&H seeks to become a sales agent for bottled water for export and household use excluding bottled water for the domestic market (currently sold by Nongshim) and develop beverages mixed with source water. In addition, LG H&H is also engaging in discussions regarding the sale of deep-sea water, which is being developed by the cities of Goseong and Donghae in Gangwon Province.

- Coffee drinks: Plans to introduce Georgia, the most popular canned coffee in Japan, and Illy, an Italian premium coffee brand, to Korea.

- Plans to introduce Glaceau, a highly functional vitamin drink popular in the US.

- Examine the feasibility of producing Minute Maid, a fruit juice produced by CCKBC, as a chilled juice and distribute chilled through a dairy company.

- Plans to develop a beverage by utilizing tangerines organically grown in Jeju.

 

** Next Steps of CCKBC

- Maintenance of internal system will be completed by the end of 2007. The post-takeover CCKBC owned by LG H&H will be officially inaugurated on Jan. 1, 2008

- The post of CEO will be held by LG H&H CEO Suk Cha. CCKBC will be operated as a subsidiary of LG H&H.