Kwangdong Pharmaceutical said it had signed a memorandum of understanding regarding the transfer of shares of BL Healthcare from BL Pharmtech, the largest shareholder.

Under the accord, Kwangdong has agreed to acquire 58.74 percent of BL Healthcare from BL Pharmtech.

The key provisions of the MOU include the granting of exclusive and monopolistic negotiation rights, details pertinent to confirmation due diligence, and mutual confidentiality obligations.

The conclusion of the stock purchase agreement is set for later this year, with an acquisition price of 30 billion won ($22.8 million), representing 5.48 percent of Kwangdong’s recent fiscal year equity.

BL Healthcare specializes in health functional foods and is involved in bio-new material research and the functional cosmetics business. It is a listed company on Konex, Korea’s tertiary bourse.

Kwangdong stressed it would create synergy with the existing health functional food business.

Earlier, Kwangdong had established KD Health Bio in July for 3 billion won to develop and manufacture health functional foods.

The corporation was established to develop, manufacture, and sell health functional foods, cosmetics, and daily necessities.

After this contract, Kwangdong Pharmaceutical is expected to continue business by creating synergy between BL Healthcare and KD Health Bio.

However, some industry officials are also predicting in the industry that the expansion of the health functional food business will not help improve the business structure biased toward food and beverages.

Kwangdong recorded sales of 1.4 trillion won on a consolidated basis last year, but the proportion of prescription drugs was only 11.9 percent, with most of the sales coming from food and beverages (62 percent).