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Photo courtesy of Yonhap News |
[Alpha Biz= Ellie Kim] SEOUL, June 2 — Korea Ratings said on June 1 that Samyang Corp.’s planned acquisition of Japan-based flavor and fragrance company Soda Aromatic Co., Ltd. would support business diversification but is likely to increase its debt burden due to significant funding requirements.
The credit rating agency (AA-/Stable) identified key monitoring factors including diversification of Samyang’s business portfolio through overseas expansion, rising leverage from acquisition financing and antitrust-related fines, and the extent of synergy creation and earnings contribution from the new business.
Samyang Corp. said on May 29 that its board approved the acquisition of a 100% stake in Soda Aromatic for 41 billion yen (approximately 387.7 billion won), with the transaction expected to close on July 1.
Founded in 1915, Soda Aromatic is a Japan-based manufacturer of flavors and fragrances with annual sales of around 170 billion won. The company operates production subsidiaries across Asia, including in China, Taiwan, Thailand and Singapore, and maintains solid profitability and a stable financial structure.
Lee Joo-ho, a senior analyst at Korea Ratings, said the acquisition would help Samyang expand beyond its domestically focused business structure and diversify its product lineup into flavors, fragrances and lactones. He added that Soda Aromatic’s stable earnings could help mitigate volatility in Samyang’s domestic food business, which has faced margin pressure from rising utility costs and regulatory penalties.
However, the agency noted that increased financial burden remains a key challenge. In addition to the acquisition cost, Samyang is required to pay approximately 224.9 billion won in fines imposed by the Fair Trade Commission over price-fixing in flour (94.7 billion won) and sugar (130.2 billion won).
Further financial strain is expected if additional penalties related to starch syrup products are finalized, raising concerns over the company’s cash flow and leverage.
Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)
