Hanmi Pharm family sells Hanmi Science shares to pay inheritane tax

Hanmi Pharmaceutical Co. headquarters in Seoul [Courtesy of Hanmi Pharmaceutical]

Hanmi Pharmaceutical Co.’s Chairwoman Song Young-sook and her daughter Lim Ju-hyun, the company’s chief executive officer, have sold their 11.8 percent stake in Hanmi Science Co. to La Défense Partners, a Korean private equity fund operator, for around 320 billion won ($240 million).

Hanmi Science is the holding company of Hanmi Pharmaceutical Co. Group.

According to sources on Tuesday, a stock purchase agreement was signed for the transaction designed to finance inheritance tax for the family following the death of founder and former Chairman Lim Sung-ki.

Song and her related parties hold a 63.1 percent stake or about 44.15 million shares in Hanmi Science. The stake sale will reduce Song and Lim’s ownership to 51.3 percent.

La Défense Partners expects to complete the fundraising to acquire their stake by the end of May. La Défense Partners has been raising investment funds since the end of last year, attracting major domestic institutional investors and financial firms. A large domestic institutional investor is participating in the fund as a limited partner and major capital firms are also said to be considering their investment.

La Défense Partners plans to support Song’s management through a co-ownership agreement. Song reportedly promised La Défense Partners priority in buying back the stake from the fund, as well as tag-along rights.

The stake sale is expected to resolve the issue of inheritance tax that will cost Hanmi Pharmaceutical Group’s family 500 billion won. Song and her three children inherited a portion of the 23.08 million shares or a 34.29 percent stake of Hanmi Science from the company’s founder who passed away in August 2020.

The family’s decision to pay the inheritance tax early is expected to calm the market’s concerns and allow for the re-rating of corporate value of Hanmi Pharmaceutical companies.

The burden of paying the large inheritance tax has also weighed on the group’s finances and management.

The company was undervalued in the stock market due to potential selling pressure related to inheritance tax payment, said an investment banker. Hanmi Pharmaceutical’s price-to-earnings ratio stands at 49 times, which is relatively low compared to the peer industry’s 106 times.