Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Namyang owner slammed for indicating 'seller's remorse'
Namyang Dairy Products' largest shareholder Hong Won-sik wipes away tears, during a press conference held May 4 at the company's headquarters in Seoul while making a public apology and announcing his resignation as chairman of the company. Korea Times photo by Oh Dae-geun
By Park Jae-hyuk
Hahn & Company considers legal action against dairy firm
By Park Jae-hyuk
Namyang Dairy Products' largest shareholder Hong Won-sik and his family members have drawn criticism for abruptly trying to delay the sale of their shares to Hahn & Company, hinting at potential regret about a previous decision regarding the deal.
The dairy producer announced Friday that it had decided to postpone an extraordinary shareholders meeting to Sept. 14. The meeting was initially supposed to be held Friday for Hahn & Company executives to join Namyang's board of directors and for the private equity firm (PEF) to pay 310 billion won ($270 million) to acquire a 53 percent stake in the firm from its owner family.
The surprising announcement prompted Namyang's stock price to fall 7.66 percent that day from the previous session's close.
While Namyang said in its regulatory filing that both buyer and seller needed more time to finalize the contract, Hahn & Company refuted this, warning the seller of all possible countermeasures, including lawsuits, in an apparent effort to avoid damage to its reputation among institutional investors worldwide.
“The deal was supposed to be closed July 30, and it must be finalized no later than Aug. 31, so it is difficult for us to understand the reason behind the seller's decision to delay the shareholders meeting,” the PEF said in a statement Friday. “We do not need more time to close the deal, because we are already prepared to make payment.”
The buyer added that it was also ready for a screening of the merger by the antitrust regulator.
Namyang declined to comment on the issue, saying the conflict just involved its incumbent largest shareholder and the potential buyer. Hong and his family members have yet to disclose their stance.
The entrance to Namyang Dairy Products headquarters in Seoul is seen in this May 28 file photo. Yonhap
Aftermath of light punishment?
Speculation is growing that the owner family members are trying to cancel the contract with Hahn & Company to maintain control of the company, or to sell their shares to a different buyer for a higher price, given that they have been cleared of multiple legal risks.
Earlier in July, Namyang avoided a two-month shutdown of its factory in Sejong, after only being ordered to pay an 828 million won fine for its “unscientific” announcement in May that its Bulgaris yogurt drinks were effective against COVID-19.
The controversy arising from this was the reason for Hong to publicly apologize and resign as chairman in May. Hahn & Company signed the share purchase agreement with the owner family, just a few days after his resignation.
The PEF promised to reform the governance structure of Namyang which has struggled with a nationwide boycott for several years, because of reports of misconduct by owner family members and the company's abusive practices against sales agents that predate the Bulgaris fiasco.
Namyang also avoided a lawsuit from its rival Maeil Dairies last month, after the latter accepted an apology from the former for ordering its PR agency to spread false rumors about it in 2019. Hong had been under investigation by the prosecutors, before Maeil withdrew the criminal complaint.