Press Release

■Transaction value for the full 100% stake (18,828,000 shares) is KRW 10,000

LG Household & Health Care (LG H&H)Ltd.(CEO: Suk Cha) signed a share purchase agreement to acquire100% of the shares (18,828,000) of Korea’s third largest beverage maker, Haitai Beverage Co., Ltd. (HBC).

The stake purchased by LG H&H was comprised of 58% owned by Asahi Breweries, Ltd. plus a remaining 42% portion from five other shareholders.

The transaction value for the entire stake is reportedly KRW 10,000, while the net debt of HBC is estimated to be KRW 123 billion at the time of closing.

Regarding the merger, LG H&H reported that they expect the firm’s competitiveness in the beverage sector to be honed by taking advantage of HBC’s infrastructure, including marketing networks, production, and logistics, creating a synergy effect with LG’s subsidiary Coca-Cola Beverage (CCB).

LG H&H will operate HBC alongside CCB within the Global Coca-Cola system. The acquisition of HBC will not only improve the quality of existing HBC brands but enable CCB to strengthen its existing labels and, propelled by the additional infrastructure, accelerate the introduction of new brands from the Global Coca-Cola system.

By obtaining cold-chain distribution capability, cold-chain Coca-Cola products such as perishable fruit juice, coffee, and products containing fresh dairy can also be launched.

Synergies

*Expansion of sales networks: Sales capabilities will significantly increase after the acquisition, narrowing the gap between CCB and the number one player, Lotte Chilsung, from 76% to 43%. Relative cold-drink equipment capacity, including showcases and vending machines, will improve from 70% to 93%.

*Improvement of productivity and logistics efficiency by utilizing the Cheonan facility: HBC’s Cheonan facility (76 acres) possesses twice the manufacturing capacity of CCB’s Yeoju facility (42 acres). By utilizing the Cheonan facility, manufacturing footprint and distribution efficiency in the Seoul metropolitan area will be significantly enhanced.

*Gain another differentiated, clean water source: By adding the water source at Pyeongchang,Gangwon-do as an augmentation to the existing capacity in Cheorwon, Gangwon-do where Diamond Water is bottled, the company is able to prepare for the future expansion of the bottled water market. Currently, the Pyeongchang facility has an extraction capacity of 100,000 tons per year, about triple the capacity of the Diamond facility.

*Accelerate introduction of cold-chain products by acquiring cold-chain distribution capability: The addition of direct and wholesale cold-chain distribution capability will assist in expanding coverage of yogurt products previously available only through channels such as wholesale markets and convenience stores. Also, new cold-chain Coca-Cola products will be able to be launched.