Seoul-based private equity firm Hahn & Co. has won its damages suit against former Namyang Dairy Products Chair Hong Won-sik, with a Seoul court ordering Hong to pay 66 billion won ($45 million) for delaying the company’s acquisition.
The Seoul Central District Court on Thursday ruled partly in favor of Hahn & Co., ordering Hong to compensate the firm for losses stemming from his refusal to honor a 2021 share purchase agreement, plus interest for delayed payment. The court dismissed all other claims against Hong’s family members, finding they held relatively small stakes and played no meaningful role in obstructing the takeover.
The ruling comes nearly three years after Hahn & Co. filed the suit in November 2022, initially seeking about 50 billion won in damages before raising the claim to roughly 94 billion won during the case.
Hahn & Co. argued that Hong’s unilateral reversal of the agreement stalled the transfer of management control, allowing Namyang’s deficits to deepen and eroding the company’s value. Hong countered that the decline was unrelated to his refusal and did not justify damages.
The court ruled that due to Hong’s refusal to fulfill the contract, the management risks at Namyang were not resolved, resulting in actual losses for Hahn & Co.
The dispute stems from Hong’s 2021 agreement to sell a 53.08 percent controlling stake in Namyang Dairy — owned by him and his family — to Hahn & Co. for 310.7 billion won. Just months later, in September 2021, he attempted to rescind the deal, alleging contractual breaches.
Hahn & Co. sued to force compliance and won at every stage. A lower court and an appellate court both upheld the agreement, and in January 2024, the Supreme Court affirmed those rulings, clearing the way for the buyout firm to take control of Namyang Dairy.
"With the ruling, the court acknowledged that binding contracts cannot be broken simply due to a change of mind without penalty," an official from the industry said.
“The decision is expected to help prevent similar disputes in the future, including unjustified delays in executions of mergers and acquisition deals.”
silverstar@heraldcorp.com
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