Namyang Dairy M&A Trial... Sale Advisor "No Mention of Baekmidang Before Contract"

Hong Won-sik, Chairman of Namyang Dairy Products / Photo by Dongju Yoon doso7@

"Whether excluded from the initial sale or not, it is said that the lady (Lee Un-kyung, Namyang Dairy Products advisor) believed she would continue to operate Baekmidang. Are you saying the defendant is lying?" (Representative of Chairman Hong's side)

"Well, either he was mistaken or lying, one of the two." (Witness)

On the afternoon of the 7th, the 5th hearing of the stock transfer lawsuit filed by Hahn & Company (Hahn & Co) against the Hong Won-sik family, chairman of Namyang Dairy Products, was held under the presiding of Judge Jung Chan-woo at the Seoul Central District Court Civil Division 30. On this day, Ham Chun-seung, CEO of PH&Company, appeared as a witness. He was in charge of advising Chairman Hong on the sale of Namyang Dairy Products.

On this day, Chairman Hong's side questioned whether conditions such as excluding the food service brand Baekmidang from the sale were discussed before the sales contract was signed. Chairman Hong has claimed that the suspension of the sale was due to unmet preconditions such as the spin-off of Baekmidang and other food service divisions and the courtesy extended to the Hong family.

On the other hand, CEO Ham testified that the Baekmidang spin-off issue was not mentioned initially. When asked, "From Chairman Hong's perspective, the (stock sale) structure was a matter to be discussed later, and perhaps he thought his spouse could continue to operate Baekmidang," he said, "Chairman Hong was not interested in Baekmidang" and that discussions related to Baekmidang occurred after the contract.

He also relayed that in response to related questions from Hahn & Co's legal representative, "'If you want to bring the food service rights or Baekmidang, you would have to offer some amount to have a justification for Hahn & Co,' I asked Chairman Hong, but there was no answer at all. He said, 'Why bother with something that is running at a loss?'"

Hahn & Co's side also asked, "On May 28, 2021, Chairman Hong sent a text message to the witness saying 'Trojan horse'." They asked, "Are you the Trojan horse?" CEO Ham replied, "I pondered a lot too, but after the deal announcement, many places said 'it was sold too cheaply,' so I guess he was angry at me." When asked, "Do you know what 'Trojan horse' means?" he responded, "Is it something like 'traitor'?"

On this day, Chairman Hong's side also emphasized the issue of 'dual representation.' They pointed out that although Chairman Hong appointed a lawyer from Kim & Chang as his M&A legal representative upon CEO Ham's suggestion, Hahn & Co also appointed another lawyer from Kim & Chang. They asked, "Isn't it unreasonable to recommend Kim & Chang expecting Hahn & Co to use them as well, despite the possibility of conflicting interests?"

However, CEO Ham rebutted that this could not be seen as dual representation. He said, "The conflict of interest arose after the contract when the seller changed their mind," and added, "Kim & Chang often advises both sides in the M&A market and internally controls conflicts by erecting walls," and "I saw Kim & Chang as a law firm capable of controlling this."

The court set the next hearing for the 21st. Chairman Hong and Hahn & Co CEO Han Sang-won are scheduled to appear as witnesses in person.

Previously, the Hong family signed a stock sales contract on May 27 last year to sell 53.08% of shares to Hahn & Company for about 310.7 billion KRW, but on September 1 of the same year, Chairman Hong notified contract termination, claiming that Hahn & Company did not fulfill the preconditions for the transaction. Subsequently, Hahn & Co filed three injunction applications, all of which were accepted by the court.

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