Namyang Dairy claims Hahn & Company's injunction is invalid

Namyang Dairy Product Chairman Hong Won-sik appears at a government audit in the National Assembly on Yeouido, Seoul, Oct. 8. Yonhap

By Kim Jae-heun

Namyang Dairy Product Chairman Hong Won-sik raised a new objection against Hahn & Company, which filed a provisional injunction against Dayou Winia Group's acquisition of the dairy firm through a local court.

Hong said Hahn & Company promised to exclude Baekmidang, an organic ice cream franchise run by the dairy firm, from the company's disposal deal and keep his children's positions in the business, but the private equity fund (PEF) changed the deal later.

He also insisted that Namyang Dairy's previous stock purchase agreement with Hahn & Company is invalid, as a law firm ― Kim & Chang ― secretly took the legal representative role for both companies. Hong said he had not known about this.

“Lawyers of both Namyang Dairy and Hahn & Company were from Kim & Chang's PEF team, who were closely related to their business. In such large-scale merger and acquisition (M&A) deals, it is difficult to find a case where both the seller's and buyer's legal advisers are from the same company and the same team,” Namyang Dairy's new legal representative LKB Partners said.

The local Attorneys-at-Law Act restricts an attorney from accepting a plaintiff and defendant's case simultaneously. However, it is not mandatory in M&A deals.

Kim & Chang said it is impossible for Namyang Dairy to not have realized this beforehand. Hahn & Company also added that the dairy firm is incorrectly arguing that Kim & Chang had acted in violation of its duty.

Meanwhile, the contract between Namyang Dairy and Dayou Winia shows the dairy firm will only hand over its controlling stake after it wins the trial against the private equity fund.

Namyang Dairy had previously signed a memorandum of understanding to sell its company to Hahn & Company, but at the last moment, Hong did not show up to complete the deal. Instead, he found a new buyer, and the PEF took legal action to stop Namyang Dairy's new contract.

The second trial revolving around Namyang Dairy's failed stock purchase agreement with Hahn & Company will be held on Thursday.

Hong resigned from his position last May to take responsibility for the “Bulgaris scandal,” in which the company had exaggerated the effects of its yogurt drink against COVID-19 in a report revealed last year.