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| Namyang Dairy Products Chairman Hong Won-sik responds to questions from lawmakers during the National Assembly audit in Seoul, in this Oct. 21 file photo. Joint Press Corps |
By Park Jae-hyuk
Questions have arisen about the hidden intention behind Namyang Dairy Products Chairman Hong Won-sik's conditional deal to sell his controlling stake to Dayou Winia Group, as there is little chance of him satisfying the conditions in the contract by defeating Hahn & Company in ongoing lawsuits, which were filed after he tried to nullify a sales agreement with the private equity firm (PEF).
"He seems to be trying to avoid public criticism until his legal battle with the PEF ends in a couple of years, by making more people believe that his family members truly intend to step away from the management of Namyang," an industry source said.
The dairy firm's largest shareholder abruptly announced Friday evening that the medium-sized Dayou Winia Group would take over his company on condition of his victory in the legal battle against the PEF. Dayou has denied rumors of any familial relationship or friendship existing between its top executives and the Namyang owner family.
Their contract also specified that Hong will sell Namyang to Hahn & Company, if he loses the court battle.
Hahn & Company has yet to make any official comment on the "deal" between the Namyang chairman and Dayou, but it has maintained its stance that it will finish acquiring Namyang after it wins the ongoing lawsuits.
At this moment, there is more likelihood of the PEF accomplishing its plan, given that it has already defeated Hong in two litigations: one filed to prevent him from selling his shares to a third party and another one that blocked him from exercising his voting rights in a general meeting of shareholders in October.
"The share purchase agreement was supposed to be finalized at 10 a.m. July 30, and the seller's notification about the cancellation of the agreement was invalid," the Seoul Central District Court said last month. "It is appropriate to consider the agreement in this case to be still valid."
The court did not accept the Namyang owner's claim that the spin-off of Baekmidang from the dairy firm was a prerequisite for his contract with Hahn & Company, thwarting the owner family's attempt to keep managing the profitable ice cream shop franchise.
Following the court ruling, Namyang declared "a state of emergency" and announced it would dismiss its owner family members ― except the chairman ― from the board of directors, in an apparent attempt to soothe the rattled sentiment of consumers and shareholders.
Namyang has struggled with a nationwide boycott for several years, because of reports of misconduct by the members of the owner family, the company's abusive practices against sales agents and its "unscientific" announcement in May that its Bulgaris yogurt drinks were effective against COVID-19. The boycott has intensified since the chairman tried to nullify his deal with Hahn & Company.
The uncertainties resulting from the owner's unpredictable behavior have also raised concerns among Namyang's minority shareholders, leading them to suffer from a rapid decline in the company's stock price over the past several months.
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