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Dairy products

Hahn & Co. acquires controlling stake in Namyang Dairy Products

Continued corporate-level blunders since 2013 have fueled a nationwide public backlash against the dairy company

By May 27, 2021 (Gmt+09:00)

Hahn & Co. acquires controlling stake in Namyang Dairy Products

South Korea’s private equity (PE) firm Hahn & Co. has acquired a controlling 53% stake in Namyang Dairy Products, acquiring all shares owned by the company’s former chairman Hong Won-sik and his family, at 310.7 billion won ($278.4 million).

Namyang Dairy Products is one of the country’s largest dairy and beverage producers. The dairy company generated a revenue of 948 billion ($848 million) in 2020 but still posted a net operating loss of 77.1 billion won ($69.1 million).

The acquisition is the PE firm’s third acquisition in Korea since the outbreak of the COVID-19 pandemic, after SK Chemicals' biodiesel business and Korean AIr's in-flight catering and duty-free retail business.

Hahn & Co. also holds a 50.5% stake in Hanon Systems Corp., which is currently on sale in the market.

“This marks our continued belief in the attractiveness of the Korea market despite headwinds presented by the current pandemic. Namyang is a franchise consumer brand in Korea with compelling opportunities to further expand and strengthen its brand,” said Scott Sang-Won Hahn, CEO of Hahn & Co.

Namyang, once a long-time leader in the country’s key dairy segments, including fermented milk, has faced a series of coporate-level crises and scandals since 2013, when it was revealed that the company’s salespeople were forcing distributors to buy more of their products.

Such news fueled a nationwide fury and ensuing boycott, displacing Namyang from the market leader position in various segments of the dairy industry. The company was the market leader for powdered milk for around 60 years until 2020, but the continued boycott allowed Maeil Dairies Co. to overtake Namyang in the segment.

More recently, the company saw blowback for its claim that its yogurt drink Bulgaris can protect against COVID-19. The former chairman Hong Won-sik resigned from his position on May 4 immediately following public backlash to the claims.

Namyang's former chairman Hong Won-sik makes a public apology on May 4
Namyang's former chairman Hong Won-sik makes a public apology on May 4

“Consumers have turned their backs on Namyang after years of corporate-level blunders. The market will see a big change with the shift in ownership,” said a food and beverage industry representative. 

Write to Chae-yeon Kim and Jong-kwan Park at why29@hankyung.com

Daniel Cho edited this article.

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