Hanmi Chairwoman and Hanmi Science co-CEO Song Young-sook (Courtesy of Yonhap)
South Korea’s Hanmi Pharmaceutical Group is set to enter a new round of a family dispute less than two months after the founding family’s two sons’ triumphant return to the group as one of the sons is seeking to oust his mom, the current group chairwoman and co-chief of Hanmi Science Co.
Investment banking industry observers warn that any fresh family feud would thwart the group’s negotiations with a private equity firm to sell major stakes to secure funds.
According to IB industry sources on Monday, Lim Jong-hoon, co-chief executive officer of Hanmi Science, will hold an emergency board meeting on Tuesday to dismiss Hanmi Chairwoman Song Young-sook, from the company’s co-CEO position.
Hanmi Science is the holding company of the Korean pharmaceutical conglomerate, and Song is Lim’s mother who shares power with the son at the company.
Jong-hoon and his older brother Lim Jong-yoon in late March won a vote battle against their mom and younger sister Lim Ju Hyun, also Hanmi Pharmaceutical Co. co-president, over a proposal to merge Hanmi with OCI Holdings Co.
Against the merger, the Lim brothers recommended five candidates for Hanmi Science’s board, including the two sons, and the five were approved by a majority of votes at the company’s annual general meeting, jointing the nine-member board of directors.
Lim Jong-yoon (left) and Lim Jong-hoon enter the venue of the Hanmi Science AGM (Courtesy of Yonhap)
By contrast, the six candidates recommended by Hanmi Chairwoman Song, including her daughter Ju Hyun and OCI Chairman Lee Woo-hyun, were all voted down.
Following the sons’ victory, the second son Jong-hoon joined her mom at Hanmi Science as co-CEO, signaling a truce in the family battle.
But peace did not last long due to the mother and son’s disagreement over Hanmi Science executive reshuffle.
Sources said the second son has been seeking to kick out two executives at the holding company, who are known as Chairwoman Song’s close confidants, to reorganize the entire executive body with his allies.
His attempt has met with strong opposition from his mom, according to sources. Without a nod from co-CEO Song, Jong-hoon can’t sack the two executives.
The son, however, seems to have found a detour to make a breakthrough – the forceful departure of his mom at an emergency board meeting tomorrow to take full control.
NEW RISK TO HANMI-PE FIRM TALKS OVER STAKE SALE
But his decision to oust Song has met with disapproval from his older brother Jong-yoon. The eldest son is said to be concerned that ongoing talks between Hanmi and private equity firms over Hanmi stake sale could suffer a setback from a new round of family feud.
Hanmi Pharmaceutical Group headquarters in Seoul
The two sons and their ally Hanyang Precision Co. Chairman Shin Dong-guk holding a 12.15% stake in Hanmi Science have been in negotiations with multinational PE firms, including New York-based PE firm KKR & Co. and US investment firm Bain Capital LP, to sell the company’s stakes.
Shin is the largest individual shareholder outside the founding family and sided with the sons during the March AGM.
The Lim brothers, Shin and the Lims’ cousins with a 3% stake together hold about 40% in Hanmi Science.
The sons and Shin are said to be open to either the handover of management rights or stake sales to secure investment.
Early last month, The Korea Economic Daily exclusively reported that the sons and KKR were in final negotiations to secure a total 51% stake or more in Hanmi Science in a deal that KKR would buy shares in the holding company and guarantee the sons’ management rights.
KKR was said to have gained the upper hand by offering more favorable terms than Bain Capital over the stake sale.
But PE firms are not allowed to invest or have limited investment options in a company embroiled in a dispute over management control under their articles of incorporation in general, said an official from the IB industry.
Song Young-sook (left), chair of Hanmi Science, and Lim Ju-hyun, co-president of Hanmi Pharmaceutical (Courtesy of Yonhap)
The founding family has been looking to finance their 500 billion won combined inheritance taxes since Lim Sung-ki, the founder of Hanmi Pharmaceutical Group, died in August 2020.
Song, who took over the helm of the group after her husband’s death, and her daughter Ju Hyun hold a combined 21.86%.
The mother and daughter were also said to be in talks with the sons and KKR to sell some of their Hanmi Science stakes to finance their remaining inheritance taxes, worth about 170 billion won.
They had attempted to sell their stake through a merger between Hanmi Science and chemicals giant OCI Holdings since January when Song also fired her two opposing sons as Hanmi Pharmaceutical Co. presidents.
But the deal fell through after they were defeated by the sons, who opposed the merger, in the vote battle in late March.
By Ji-Eun Ha
hazzys@hankyung.com
Sookyung Seo edited this article.
