He Said He Would Step Down... Namyang Dairy Products Sale Falls Through

Notice of Contract Termination to Private Equity Firm Hahn & Co
Chairman Hong Won-sik: "Will Hold Accountable for Breach of Agreement"

Hong Won-sik, chairman of Namyang Dairy Products, is holding a public apology press conference related to the 'Bulgaris incident' on the 4th at Namyang Dairy Products headquarters in Gangnam-gu, Seoul. Last month, Namyang Dairy Products announced at the 'Symposium on Developing Antiviral Foods in the COVID-19 Era' that the Bulgaris product was confirmed to reduce COVID-19 by 77.8%. However, the research results were revealed to have exaggerated the findings from animal 'cell-level' experiments, causing controversy. In response, Hong Won-sik, chairman of Namyang Dairy Products, announced his intention to resign at the public apology press conference that day. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Lim Hye-seon] The merger and acquisition (M&A) of Namyang Dairy Products has ultimately ended in failure following Chairman Hong Won-sik's declaration of the deal's collapse.

Hong, the current major shareholder of Namyang Dairy Products, announced on the 1st through his legal representative LKB & Partners that he has notified the counterparty, Hahn & Company (Hahn & Co), of the termination of the stock purchase agreement. Previously, on May 27, Chairman Hong and the private equity firm Hahn & Company had signed a stock purchase agreement for the transfer of 53.08% of shares held by Hong’s side for 310.7 billion KRW.

In a statement released that day, Chairman Hong’s side said, "We deeply regret and feel sorry that the efforts to restore normal management through the sale did not bear fruit," but added, "We only requested the fulfillment of matters mutually agreed upon after the contract was signed, but the buyer, Hahn & Co, changed their stance after the contract and refused to comply with the pre-agreed terms." They further stated, "Due to Hahn & Co’s breach of contract, we had no choice but to notify the termination of the stock purchase agreement."

They also claimed that Hahn & Co violated confidentiality obligations. Chairman Hong’s side stated, "Hahn & Co destroyed the basic trust relationship by making harsh criticisms against the seller without consideration," and added, "Even before the deal was finalized, they acted as if they owned Namyang Dairy Products by interfering unjustly in management, including personnel matters."

However, the M&A industry explains that it is highly unusual for a deal that was practically concluded to escalate into such a legal dispute. In the business community, criticism is mounting that Chairman Hong, who was pushing for the sale of the company taking responsibility for management failures such as the Bulgari incident, is showing an incomprehensible behavior by breaking the contract simply due to a change of heart.

This content was produced with the assistance of AI translation services.