Namyang Dairy sold to Hahn & Company, ending 60 years of family control

Korean private equity firm Hahn & Company acquires Namyan Dairy Products after a two-year legal dispute. The firm hopes to rebuild consumer trust and stabilize management.

Namyang Dairy Products' headquarters in Gangnam District, southern Seoul [YONHAP]

Hahn & Company, a Korean private equity firm, has taken over Namyang Dairy Products, the country's third-largest dairy company, putting an end to a two-year legal dispute over management rights and the founding family's six-decade reign of control.

The Supreme Court's Thursday ruling authorized the transfer of a majority of Namyang Dairy Products' shares to Hahn & Company, affirming the previous decisions of lower courts.

The dispute began with Chairman Hong Won-sik's resignation in May 2021, which was triggered by Namyang's misleading claims that its Bulgaris yogurt could prevent Covid-19. Hong, in response to public criticism, agreed to sell his 52.63 percent ownership stake, represented by 378,938 shares, to Hahn & Company for 310.7 billion ($237.6 million).

However, complications emerged that September when the 73-year-old chairman terminated the share purchase agreement, alleging that the private equity firm had failed to adhere to measures outlined in the agreement — for example, failing to grant himself and his family members executive roles. Hong also raised concerns over legal ethics, pointing to the fact that the Kim & Chang law firm was representing both parties, as arguments against the original agreement's validity.

Hahn & Company countered by filing a lawsuit, asserting that Hong had unfairly terminated the agreement. Despite objections from Namyang's chairman, both the lower courts and the high court ruled that the contract was valid. Hahn & Company had previously acquired Woongjin Foods in 2013, later selling it for more than double the acquisition price within five years. The company has since continued expanding its portfolio, acquiring companies in manufacturing, shipping, distribution and hospitality such as SK Shipping.

Hahn & Company vowed to prioritize the stabilization of Namyang Dairy Products' management, although concerns about possible restructures or head count cuts remain.

“With the protracted legal dispute finally settling, all that remains is for Chairman Hong to fulfill the stock purchase agreement ... and we hope for a respectful acknowledgment of the Supreme Court's decision from Chairman Hong's side,” the company said in a statement Thursday.

“Prioritizing the company's operational stability, we aim to promptly execute the stock purchase agreement and will collaborate with Namyang's employees to devise plans for managerial improvement,” it added. “We strive to restore consumer trust and pave the way for a new chapter in Namyang's journey.”

Namyang Dairy Products, in a separate statement, said that “everyone on the team intends to put forth their best efforts in their designated roles to contribute to the prompt recovery of the company's management.”

The dairy unit has been saddled with a chain of controversies, including coercive sales to distributors; the demotion of a female employee who took child care leave; and a drug scandal involving the founder's granddaughter, Hwang Ha-na.

Namyang Dairy Products reported a revenue fall below 1 trillion won in 2020 and sustained three consecutive years in the red. The company disclosed an accumulated operating loss of 28 billion won in the first three quarters of the last fiscal year alone.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]