Sempio and Sempio Food Company Announce Merger to Streamline Operations

Sempio and Sempio Food Company announced a merger plan to integrate their management resources and streamline business operations. Under the plan, Sempio Food Company will serve as the surviving operating entity, absorbing the holding company to combine asset, financial, investment, and manufacturing functions.

The companies stated that the consolidation aims to improve long-term investment responsiveness and management efficiency. By merging into a single entity, the businesses intend to reduce administrative procedures related to permits and contracts while safeguarding ongoing operations for roughly 800 employees.

The restructuring also addresses regulatory adjustments tied to South Korea's Fair Trade Act. Sempio currently falls short of the 500 billion won total asset threshold required for holding companies, meaning it is scheduled to lose its holding company status and convert into a general listed company after the grace period ends on June 30 of next year.

Furthermore, upcoming accounting standards under K-IFRS No. 1118 will exclude equity-method gains from sales, posing potential challenges for standalone sales requirements. Company officials noted that the merger will proactively navigate these institutional shifts while maintaining a stable financial structure and management base.

The integrated corporation plans to utilize Sempio's substantial cash assets to fund capital expenditures without incurring interest expenses from external borrowing. The secured capital will support the construction of a new production plant in Jecheon and the expansion of the Yeongdong factory to accommodate rising global demand for Korean cuisine.

Additionally, the combined company intends to accelerate research and development initiatives for high-value-added bio-materials using microbial fermentation, building upon eight decades of fermentation technology. The merger sets a share exchange ratio of 2.0881235 shares of Sempio common stock for each share of Sempio Food Company common stock.

A shareholders' meeting is scheduled for December 17 to vote on the merger proposal. The transaction is slated to become effective on February 1 of next year, with the newly issued shares scheduled for listing on February 18, shifting the largest shareholder stake to CEO Park Jin-seon.