US-based investment house First Eagle Investment Management and its mutual fund have cashed in a combined 35 billion won ($31.5 million) during a weeklong trade since late May from its investment in event-driven Namyang Dairy stock in South Korea, filings showed Friday.
Shares of Namyang Dairy Products, hit a price ceiling immediately after an announcement on May 27 that local private equity firm Hahn & Co. will buy a controlling 52.6 percent stake in the firm from the owner family, including ex-chairman Hong Won-sik.
First Eagle Investment Management, overseeing $109 billion in assets as of March, has divested 6 percent of Namyang Dairy’s voting rights to cash in 21.6 billion won from May 25 to June 1.
First Eagle Global Fund, a series trust fund managed by the investment firm, also sold 13.4 billion-won worth of 3.7 percent Namyang Dairy stake during the same period.
The two entities’ combined holding in Namyang Dairy shrank from 13.9 percent to 4.3 percent following the weeklong divestment.
The transactions came as Namyang Dairy stock price rose 30 percent on May 28 and 23 percent the next trading day on May 31, following an acquisition announcement.
The proposed buyer Hahn & Co. unveiled on May 27 that it aims to buy the controlling stake for 820,000 won apiece, nearly double that of the closing price on May 27, at 439,000 won each.
Namyang Dairy is trading on the Korea Exchange. It was trading at 593,000 won apiece as of 11 a.m. Friday.
Hahn & Co., Korea’s second-largest private equity firm, pledged to adopt a corporate governance structure under which a new group of independent executive directors are entitled to make decisions on the execution of company affairs, in line with other portfolio companies.
Hahn & Co. has claimed that the structure will help the company, which has suffered from opaque decision-making led by the scandal-ridden owner family, retain transparency in management.
Ex-chairman Hong has been blamed for a series of bad news stories about Namyang, including the company’s spreading of misinformation about its yogurt products’ efficacy to cure COVID-19. The company was also accused of selling leftover inventory to its sales agents in a “gapjil” practice and defaming domestic rivals.
Hahn & Co also vowed not to lay off Namyang Dairy’s staff as it takes over management.
First Eagle was a long-term investor in the dairy product maker without the intention to engage in management.
By Son Ji-hyoung (email@example.com