Hanmi to fire founder's wife, entering new round of family feud

South Korea’s Hanmi Pharmaceutical Group is set to enter a new chapter of an ongoing family feud less than two months after the founding family’s two sons’ triumphant return to the group as one of the sons seeks to oust his mother, the current group chairwoman and co-chief of Hanmi Science Co.

Investment banking industry observers warn that any fresh family drama 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 her post as the company’s co-CEO.

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 mother and younger sister Lim Ju Hyun, who serves as 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.

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's executive reshuffle.

Sources said the second son has been seeking to kick out two executives at the holding company, known to be Chairwoman Song's close confidants, to reorganize the entire executive body with his allies.

His attempt was met with strong opposition from his mother, according to sources. Without a nod from co-CEO Song, Jong-hoon can’t sack the two executives.

The son Jong-hoon, however, thought of a way to bypass this – the forceful departure of his mom at an emergency board meeting tomorrow to seize full control.  

NEW RISK TO HANMI-PE FIRM TALKS OVER STAKE SALE

Meanwhile, Lim's decision to oust Song has met with disapproval from his older brother Jong-yoon. The eldest son is said to be concerned that a new chapter in the family feud could set back ongoing talks between Hanmi and private equity firms over the Hanmi stake sale. 

The two sons and ally Hanyang Precision Co. Chairman Shin Dong-guk, who has 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 stakes in the company. 

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 for the stake sale.

But PE firms are not allowed to invest or have limited investment options in a company embroiled in disputes over management control under their articles of incorporation in general, said an official from the IB industry.

The founding family has been looking for a way to finance their 500 billion won in combined inheritance taxes since Lim Sung-ki, the founder of Hanmi Pharmaceutical Group, died in August 2020.

Song, who took the group's helm 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, totaling 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 a late March vote.

Write to Ji-Eun Ha at hazzys@hankyung.com

Sookyung Seo edited this article.