Festering family feud behind the surprise OCI-Hanmi Pharm merger

The merger announcement between OCI Holdings, a solar company, and Hanmi Pharmaceutical Group (Hanmi Pharm), one of Korea's major pharmaceutical companies, surprised many, including the eldest son of the controlling family behind Hanmi.

Hanmi Pharmaceutical (Pharm) headquarters building in eastern Seoul [HANMI PHARM]

The merger announcement between OCI Holdings, a solar company, and Hanmi Pharmaceutical Group (Hanmi Pharm), one of Korea's major pharmaceutical companies, surprised many, including the eldest son of the controlling family behind Hanmi. This has sparked speculation about a potential management dispute among the family's siblings.

Lim Jong-yoon, Hanmi Pharm President and the eldest son of the pharmaceutical company’s founder, the late Lim Sung-ki, wrote on Coree Group’s social media account that he “did not receive any form of notification, information or documents [related to the merger decision] neither from Hanmi nor the family,” on Saturday, a day after the merger was announced. Lim serves as the chairman of Coree Group.

The president expressed strong skepticism over the planned merger in an interview with Sedaily Tuesday, saying that he will proceed to secure a controlling stake in Hanmi Science, the holdings company of Hanmi Pharm Group. The goal is to secure 51 percent of the holdings company, according to Lim.

Lim is now butting heads with his younger sister Lim Joo-hyun, Hanmi Science president and head of business strategy, who has been spearheading the merger decision on Hanmi’s side, and their mother Song Yeong-sook, Hanmi Science CEO and Hanmi Pharm Group Chairman. Speculations suggest that Song and younger sister Lim will leverage the cash acquired from selling their stakes to OCI Holdings to pay the inheritance tax levied upon the founder’s death in 2020.

OCI Holdings, the solar panel and chemicals supplier, and Hanmi Science announced a merger on Friday with the former set to acquire a 27 percent stake in the latter for 770.4 billion won ($578 million). Hanmi Science President Lim Ju-hyun, in return, will acquire 10.4 percent of OCI Holdings. When the merger is completed, OCI Holdings will become Hanmi Science’s largest shareholder while Joo-hyun and her allies will become OCI Holdings’ largest shareholder.

OCI Holdings CEO Lee Woo-hyun and Hanmi’s Lim Ju-hyun will become co-CEO of OCI Holdings after the merger.

As of Jan. 11, the eldest son Jong-yoon holds a 9.91 percent stake in Hanmi Science, while his sister Ju-hyun holds 10.20 percent and Song 11.66 percent. Their younger brother and Hanmi Fine Chemical President Lim Jong-hoon, who has a 10.56 percent stake, has not yet released any official statement but the older Lim told the press that he plans to file for an injunction against the merger together with his younger brother.

Following the controversy, Hanmi Pharm Group released a statement on its intranet website assuring “There is no possibility that the merger with OCI Holdings falls through.”

The closing of the merger deal is subject to change based on the review process.

The family feud at Hanmi drove Hanmi Science's share price near the ceiling on Tuesday. Hanmi Science skyrocketed 29.79 percent on the Kospi bourse to close at 56,200 won.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]