[Column] Namyang Dairy Products' Challenging Comeback

[Asia Economy Reporter Lim Hye-sun] One recurring theme in dramas set in the 1980s and 1990s is fathers who like their friends acting as guarantors for debts. The common storyline is that the protagonist, who suffers after losing their home because their father couldn’t refuse a friend’s request and guaranteed a loan, eventually succeeds. It is truly lamentable that just by stamping a document once, one can lose all their assets and their entire family ends up homeless. However, a promise is a promise. For this reason, current laws inevitably place great importance on documents, handwritten signatures, and seals.

The attempt to replace the board members of Namyang Dairy Products ultimately failed. The extraordinary shareholders’ meeting of Namyang Dairy Products held at 9 a.m. on the 29th ended in chaos due to a lack of quorum, as Chairman Hong Won-sik’s family was unable to exercise their 53.08% stake. Industry analysts widely believed that Chairman Hong would appoint a new director from his close associates at this meeting to prepare for a prolonged sale process. However, the court’s ruling that the stock purchase agreement between Namyang Dairy Products and Hahn & Company is valid has put a stop to Chairman Hong’s plans.

The Hong family signed a stock purchase agreement on May 27 to sell their 53.08% stake in Namyang Dairy Products to Hahn & Company for 310.72916 billion KRW amid controversy over the antiviral effects of Bulgari’s COVID-19 claims. On the day the deal was to close, Chairman Hong suddenly postponed the shareholders’ meeting. Subsequently, on the 1st of last month, Chairman Hong notified the termination of the contract, citing reasons such as Hahn & Company’s unfair interference in management. He also claimed that Hahn & Company failed to fulfill the precedent conditions for the transaction. During the legal dispute, it was revealed that the “precedent conditions” included excluding the food service brand Baekmidang from the sale and maintaining executives from the owner’s family. However, the court found that such details were not included in the documents. The court ruled, “Based solely on the materials submitted by Chairman Hong’s side, it is difficult to recognize that Hahn & Company had an obligation to guarantee the spin-off of the food service division.”

The late founder, Honorary Chairman Hong Du-sik, passed down the family business to the current Chairman Hong Won-sik based on the “Four No’s (4Mu) Management” principle. This management style means no borrowing (no debt), no labor disputes, no involvement of relatives (no factions), and no company-owned buildings. What about the current Namyang? The 4Mu management has long disappeared. Now, even trust has been lost. Chairman Hong tearfully announced the sale of the company to restore the company’s image in crisis. We hope to see an honorable retirement.

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