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Hahn & Co. sues Namyang owner over completion of $267 mn deal

The buyout firm rejects Hong’s new conditions, saying Hong is hinting at the deal's collapse

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

Hahn & Co. sues Namyang owner over completion of 7 mn deal

South Korea’s private equity firm Hahn & Co. filed a lawsuit against the owner of Namyang Dairy Products and his family to complete a $267 million deal to buy the dairy and beverage maker.

Hahn & Co. signed a deal to purchase a majority stake in the scandal-hit company at 310.7 billion won ($266.9 million) in May from Namyang Chairman Hong Won-sik and his family members. But Hong did not appear at an extraordinary shareholder meeting to conclude the deal on July 30 without prior notice and the company postponed the meeting to Sept. 14 in a move that put the deal at risk of collapse.

Hahn & Co. said on Aug. 30 that the lawsuit was inevitable due to the unprovoked delay in execution, unreasonable requests and even hints of a possible cancellation of the contract from the Namyang chairman.

“We judged it would be difficult to close the deal with our good faith alone even as we have tried for a smooth conclusion through negotiation and persuasion over the past few weeks,” the PE firm said.

Hong proposed talks with some new prerequisites related to the major shareholder’s family after having not mentioned anything for more than two weeks since the extraordinary shareholders' meeting on July 30, according to Hahn & Co. Hong even suggested the possibility of breaking the agreement if the negotiations were not concluded by Aug. 31, although he had publicly pledged to close the deal without these conditions, Hahn & Co. said.

The PE firm rejected Hong’s requests since they were not based on the contract nor mentioned before. Hahn & Co. said those demands were not ones that parties involved in the sale of a 53% stake in a listed company were able to decide. In addition, the requirements were judged to put up a critical roadblock to Namyang employees’ efforts to resolve the crisis, Hahn & Co. explained. The buyer decided to bring the deal to court since Hong’s family is rejecting the execution of their agreement, by maintaining those requests.

“Once the seller fulfills the contract, the transaction will be concluded and the lawsuit will be dropped, as we maintain our confidence in Namyang Dairy’s potential and our intention on the takeover has not changed,” Hahn & Co. said.


The seller immediately protested, saying Hahn & Co. has breached the confidentiality agreement. “There is still a deadline and we are proposing talks with our best efforts to abide by the terms of the contract. It is regrettable that the buyer is violating the contractual confidentiality obligation by filing a lawsuit and issuing a press release,” Hong’s side said.

Hahn & Co. and Namyang had agreed to conclude the transaction on July 30 after signing a contract on May 27. The buyout firm obtained approval from the domestic antitrust regulator and had prepared the funds to make the payment.

Hong, however, sent a letter around 10 pm on July 29 saying that he has not received any notice that the deal would be closed on July 30, according to Hahn & Co.
Namyang Chairman Hong Won-sik makes a public apology and announces his resignation on May 4
Namyang Chairman Hong Won-sik makes a public apology and announces his resignation on May 4

Hong appeared to have changed his mind shortly after signing the agreement with Hahn & Co. with the appointment of LKB & Partners as his legal counsel amid talks that his company was priced too low.

He decided to sell the stake after he announced his resignation as chairman of the company on May 4 following public backlash to the company’s claim that its yogurt drink Bulgaris can protect against COVID-19. But according to Namyang’s half-year report filed to a local financial regulator earlier this month, Hong was still listed as the company chairman as of June 30, when the report came out. The chairman has recently been working at the company's headquarters in Seoul, according to media reports.

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.

Write to Jun-ho Cha at

Jongwoo Cheon edited this article.

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