Reporter's Notebook Hong's greed behind Namyang's acquisition deal
Employees enter the headquarters of Namyang Dairy Products in Seoul, May 3. Yonhap
Hong allegedly asked Hahn & Company to maintain his children's positions at the company
By Kim Jae-heun
In the end, Hahn & Company decided to file a lawsuit against Namyang Dairy Products and its ex-chairman, Hong Won-sik, for violation of a share purchase agreement.
The local private equity fund said it had no choice but to take legal action against the buyout company for delaying the deal and Hong for making unreasonable demands.
Hahn & Company did not reveal the exact nature of these demands, but there is speculation that Hong wanted to add an extra clause in the contract to maintain executive positions for his two sons, Hong Jin-seok and Hong Bum-seok.
Hahn & Company hinted as much in its statement released on Monday.
“There were personal demands that aimed to pursue benefits for Hong's family and put strain on Namyang Dairy, which were irrelevant to the contract. It is not appropriate to speak of them as Hong claims it is a breach of contract to reveal what he requested,” a Hahn & Company official said.
Hong denied the insinuation.
A screen at Yonhap Infomax in Seoul shows Namyang Dairy Products' stock price surge after its chairman made a public apology, May 28. Yonhap
However, if it is true, Hong is playing a tricky game.
When he made an official apology in May, he promised he would not pass down the management of the company to his children for the sake of Namyang Dairy's future.
However, his words did not last long. He called back his eldest son Hong Jin-seok to the senior executive position only a month after the son was dismissed for embezzlement. His second son Hong Bum-seok was also promoted recently as an executive without a clear position.
Another allegation is that the elder Hong asked for preferred bidder status when Hahn & Company resells Namyang Dairy. After Hong offered to sell off his company and its stock resurged as a result, he could have changed his mind.
Meanwhile, Hong confirmed through his legal representative LKB & Partners that the sale of Namyang Dairy has been canceled by Hahn & Company on Wednesday.
“I feel sorry that the company's efforts to normalize management have not paid off. Despite what rumors said about me I did not make additional demands that were not agreed to in the contract. We asked the buyer to implement only what had been agreed to in the deal. However, the buyer changed its attitude after signing the contract and refused to follow the agreement,” Hong said in his official statement.
Hong added that he had delivered a message to revoke the contract, and he will find a new candidate to buy Namyang Dairy as soon as the current dispute ends.
“It is my last duty to find a buyer and hand over the company to someone who really cares about Namyang Dairy's executives and will develop the firm,” Hong said.