Buyout firm Hahn & Co., a proposed buyer of a controlling stake in Namyang Dairy Products, said Friday it is considering legal action against ex-Chairman Hong Won-sik, as the proposed seller delayed the deal on the date of the transaction without consent.
This comes as the proposed seller put off the extraordinary shareholders meeting scheduled Friday morning by six weeks to early September, citing “more time needed to contemplate on the deal before closing upon the request of both parties,” in a filing submitted to Korea‘s financial authorities.
The meeting was meant to invite Hahn & Co., the second-largest Seoul-based private equity firm, under the sales and purchase agreement signed in May and carry out a board reshuffle to manage the scandal-ridden dairy product maker.
Hahn & Co. expressed regret over Hong and other proposed sellers for their “unilateral” decision surrounding a 310.7 billion won ($270.2 million) takeover attempt.
Hahn & Co. said in a statement that the proposed seller -- Hong and two individuals who own a combined 52.6 percent stake -- had notified it of the delay just Friday, without reasonable grounds. Also, the sellers’ decision to postpone the transaction to September is “incomprehensible,” given that the contract had mandated the two parties to close the deal by no later than Aug. 31.
The buyout firm added that it had completed all proceedings before Friday, including antitrust approval and cash mobilization.
“(Namyang Dairy) is committing an apparent breach of stake sales and purchase contract, so Hahn & Co. will inevitably take all available options including legal actions into consideration,” Hahn & Co. said in a statement.
The news comes as Namyang Dairy announced on July 15 that a shareholders meeting will take place Friday to approve the stake transfer and name seven new members of the board of directors, with four coming from Hahn & Co., including its Chairman Yoon Yeo-eul.
Shares of Namyang Dairy, trading on the Korea Exchange‘s main board Kospi, plunged 7.7 percent Friday.
Ex-Chairman Hong, the largest shareholder of Korea‘s No. 1 dairy maker, stepped down as he pledged to end his family’s dynastic control in May amid a series of scandals.
Namyang Dairy was under fire for spreading misinformation about its yogurt products’ efficacy in treatment of COVID-19. Prior to the news that fluctuated its stock price, it was also accused of dumping leftover inventory to sales agents and defaming domestic rivals.
By Son Ji-hyoung (email@example.com