Lotte Confectionary Co. announced Sunday it plans to merge with Lotte Pharm Inc. in a bid to foster synergies in their health food business.

The Korean snack and sweets maker will remain the largest stakeholder in its pharmaceutical unit as it already holds a 100 percent share. Lotte Aluminum Co. has a controlling stake in Lotte Confectionary with 15.29 percent.

The merger, which needs statutory approval from shareholders, is scheduled to take effect on Oct. 1.

Under the deal, the two subsidiaries of retail giant Lotte Group will consolidate their operations to expand their health product brand “Health 1.” Although owned by Lotte Pharm, the label’s red ginseng products have been manufactured by Lotte Confectionery.

“The merger will allow us to strengthen our competitiveness and position in the market as the two companies can scale up the size of corporate assets, diversify business portfolios and create synergies by integrating production and retail networks,” the confectionary firm said.

Lotte Confectionery said it also plans to spin off its Natuur premium ice cream business into a new franchise company, which will be launched on Oct. 1.

(heeshin@heraldcorp.com)