Namyang Dairy's founder confirms M&A deal still valid

Namyang Diary Product's former Chairman Hong Won-sik wipes tears as he steps down from his position at the company's headquarters in Seoul on May 4. Yonhap

By Kim Jae-heun

Namyang Dairy Products founder Hong Won-sik, who was recently hit for his abrupt cancellation of a scheduled meeting with Hahn & Company to finalize the company's sell-off on July 30, confirmed that the deal can still go ahead.

“I did not intend to cancel the deal with Hahn & Company. The temporary meeting of shareholders was only postponed because we were not fully prepared, thus we closed off the transaction. The deal will eventually take place,” Hong said through a local report, Tuesday.

Hong added that he had kept silent for the last two weeks because he could not reveal specific details in the contract as a refutation to Hahn & Company's argument that he had canceled the deal unilaterally.

“I thought it was inappropriate as a contracting party to disclose the transaction process in detail. As the largest shareholder of this company, I am always striving to maximize its corporate value and I am currently dedicated to the ongoing deal to make it successful. I hope Hahn & Company is with us in this regard,” Hong said in a statement.

Hong's statement was revealed personally as he no longer engages in the company's business management.

In the first week of this month, the dairy firm planned to invite executives from Hahn & Company to fix the date of handing over the 53.08 percent stake owned by the former chairman and his family. The private equity fund (PEF) agreed to pay 310.7 billion won ($263.9 million). However, Hong delayed the meeting by six weeks to Sept. 14 and did not show up for the event.

Local reports claimed that Hong was dissatisfied with the acquisition price proposed by Hahn & Company. Namyang Dairy said the two companies needed more time to smooth out the agreement but the PEF said it was considering taking legal action.

Meanwhile, Hong reportedly has been showing up at his office at Namyang Diary's headquarters in Seoul. Although he no longer holds any position at the company, the former chairman is in the office almost every day to address current management issues.

On Aug. 3, only a few days after he postponed the shareholders meeting, Hong had a face-to-face talk with the company's labor union.

“Hong told us that he will make sure the company is handed over to Hahn & Company, but he did not reveal anything in detail. He also gave ambiguous answers to our questions related to the stock purchase agreement. Many of us saw that he wanted to withdraw the sell-off contract,” an official at Namyang's union said.