Hanmi’s planned merger with OCI scrapped as sons win family feud

Hanmi Pharmaceutical Group’s proposed merger with OCI Holdings Co. has collapsed after two sons of the group’s founding family, who opposed the merger, won a vote battle against the merger's proponents on Thursday.

At the annual general meeting (AGM) of Hanmi Science Co., the holding company of the pharmaceutical conglomerate, all five board candidates recommended by the two sons, Lim Jong-yoon and Lim Jong-hoon, were approved by a majority of votes, joining the nine-member board of directors. The two Lims were among the five.

By contrast, the six candidates recommended by Hanmi Chairwoman Song Young-sook, including her daughter and Vice Chairwoman Lim Ju-hyun and OCI Chairman Lee Woo-hyun, were all voted down at the shareholders’ meeting.

Song, the wife of Hanmi’s late founder Lim Sung-ki, has been seeking a merger between Hanmi and OCI since January.

Immediately after the AGM vote, OCI Holdings issued a statement, saying “We humbly accept the Hanmi shareholders’ decision. The Hanmi-OCI integration process will not proceed. We wish Hanmi Pharmaceutical good luck.”

Shares of Hanmi Science closed 9.1% higher at 3,700 won on Thursday after the vote, outperforming the benchmark Kospi index’s 0.3% fall. OCI Holdings ended 0.5% lower at 94,100 won.

MINORITY SHAREHOLDERS CAST VOTES IN SONS’ FAVOR

The voting results came as a surprise as Chairwoman Song and her followers were thought to control more votes than her two sons and their friendly shareholders.

Up until Wednesday, the two sons were said to have secured friendly shareholders representing 40.57% of valid votes.

Song, her daughter and their followers, by contrast, were known to have secured 43% of valid votes.

The chairwoman had the upper hand as Korea’s state-run pension fund, the National Pension Service (NPS), on Wednesday threw its support behind her, vowing to vote for her recommended board candidates.

The NPS owns a 7.66% stake in Hanmi Science.

Analysts said Thursday’s voting results were swayed by minority shareholders, who turned their back on Hanmi's chairwoman and current management following Hanmi share’s sharp price declines in recent years.

Song has been leading the Hanmi Pharmaceutical Group since the death of her husband Lim Sung-ki in August 2020.

Shares of Hanmi Science, which moved between 70,000 won and 80,000 won near the end of 2020, fell to a low of 29,850 won in October 2023.

Industry officials said Hanmi’s shareholders were also dissatisfied with the pharmaceutical firm’s pursuit of a merger with OCI, a solar power cell manufacturer.

"There has hardly been any successful M&A case between two different types of companies. OCI’s acquisition of Bukwang Pharmaceutical didn’t provide any sales boost either,” said an industry official.

Hanmi’s minority shareholders who cast their votes at the AGM were about 4.5% of valid votes, sources said.

FAMILY FEUD

The Hanmi family feud broke out in January when Chairwoman Song announced the merger plan and fired her two opposing sons –  eldest son Lim Jong-yoon and second son Lim Jong-hoon – as Hanmi Pharmaceutical Co. presidents.

Instead, she promoted her daughter from president to vice chair ahead of the AGM.

Now that the two sons won the AGM votes, they are expected to reshuffle Hanmi management.

Lim Jong-yoon said at a press conference last week that he aims to post 1 trillion won ($741 million) in net profit and 50 trillion won in market capitalization for the group within five years.

“We aim to grow our group into Korea’s Lonza that can produce 100 biosimilar drugs,” he said.

Based in Basel, Switzerland, Lonza Group AG is one of the world’s top biopharmaceutical contract manufacturing companies.

Write to Young-Ae Lee and Jong-Kwan Park at 0ae@hankyung.com


In-Soo Nam edited this article.