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Hahn & Co’s $270 mn deal to buy Namyang Dairy at risk of collapse

Namyang owner delays controlling stake sale process without consent with buyer

By Jul 30, 2021 (Gmt+09:00)

Hahn & Co’s 0 mn deal to buy Namyang Dairy at risk of collapse

South Korean private equity (PE) firm Hahn & Co.’s deal to acquire Namyang Dairy Products is at risk of collapse as the owner and his family of the country’s major dairy and beverage maker on July 30 abruptly delayed the process for the contract.

In May, Namyang’s former Chairman Hong Won-sik agreed to sell a controlling 53% stake in the company to Hahn & Co. at 310.7 billion won ($270.3 million).

But Hong did not show up at a general shareholders’ meeting to conclude the sale. He may have decided to break the agreement although he will lose 10% of a down payment on the transaction, as the company’s shares soared after the deal, analysts said.

Namyang said it postponed an extraordinary general shareholders’ meeting to Sept. 14 in a filing to a financial regulator. The company had been originally scheduled to hold the meeting on July 30 to complete the deal by changing articles of association and appointing new directors including Hahn & Co.’s Chairman Yoon Yeo-eul. But Namyang announced the delay through the filing, saying it needs time to prepare conclusion of the stock trading deal between the two parties. It is extremely unusual in a normal M&A deal for a seller to delay schedules without telling a buyer.


Hahn & Co. immediately protested, saying that was “an obvious violation of the stock transaction contract.” The PE firm also said it will consider all measures including legal action against Hong.

A Namyang official said the company has no specific stance on the issue since it is “a matter between ex-Chairman Hong and Hahn & Co.”

Hong decided to sell the stake after stepping down following public backlash to the company’s claim that its yogurt drink Bulgaris can protect against COVID-19. Namyang, once a long-time leader in the country’s key dairy segments, including fermented milk, has faced a series of corporate-level crises and scandals since 2013, when it was revealed that the company’s salespeople were forcing distributors to buy more of their products.
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

After the agreement between Hong and Hahn & Co., the buyout firm proceeded necessary steps including the antitrust body’s approval. It also prepared cash to pay the sellers. But the deal was on the verge of collapse after Hong unilaterally notified Hahn & Co. of the delay of the shareholders’ meeting.


Hong’s move has been expected, given growing market talks that he may have sold the company too cheaply to Hahn & Co, according to the industry sources. Hong sold a share at 820,000 won, a near double of a closing price of 439,000 won on May 27 when they signed the deal.

Talks swirled, however, that the price was too low as the company is the No. 2 player in the domestic industry with strong product lineups despite the worst risks on corporate reputation. Reflecting the views, Namyang’s shares jumped to as high as 760,000 on July 1, not far from the deal price. Rumors also spread that some investors including other PE with ample money proposed Hong to buy the stake at more than 500 billion won including a penalty for breaking the contract. It is an industry practice to pay a 10% of down payment as a penalty if one cancels a transaction after an agreement. Those rumors and talks sparked speculations that Hong may sell to others, which offer higher prices, although he was understood to have not contacted any yet.
Namyang shares surged after the deal with Hahn & Co.
Namyang shares surged after the deal with Hahn & Co.

“This is ridiculous as the transaction was de facto concluded,” said an investment bank industry source. “The recent strength in Namyang shares reflected hopes on a new owner. So, it is unclear how much Hong’s decision will benefit the company or himself.”

The news of delays in the sale process knocked down the stock. It closed down 7.7% to 603,000 won.

Write to Chae-yeon Kim and Jun-ho Cha at

Jongwoo Cheon edited this article.

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