Korea’s Hanmi family feud to end as key shareholder mediates

South Korean Hanmi Pharmaceutical Group’s founding family is set to conclude an ongoing feud as the group’s top individual shareholder has agreed to cooperate with the eldest son, who had been embroiled in a dispute with his mother.

Hanyang Precision Co. Chairman Shin Dong-guk, the largest shareholder of the holding company of the Korean pharmaceutical conglomerate Hanmi Science Co. with a 12.43% stake, said on Wednesday that the founding family does not have any plan to sell Hanmi Pharmaceutical Co. to foreign investors after the agreement.

“All three parties – the mother and daughter, the brothers and Chairman Shin – agreed to join forces through Shin’s mediation, establishing a balanced management group system,” said Lim Jong-yoon, currently a director of the holding company and the eldest son of late Hanmi Pharmaceutical Group founder and Chairman Lim Sung-ki.

“We will invest in forming the best human resources with various professional managers including committees and advisory groups, dropping the vertical structure centered on a chairman and chief executive.”

The major drug-making conglomerate has been engulfed in a conflict between the founding family’s two sons – Lim Jong-yoon and Lim Jong-hoon, co-chief executive officer of Hanmi Pharmaceutical Co. -- and the brothers’ mother, Hanmi Chairwoman Song Young-sook, who sought the group’s merger with OCI Group, backed by their sister Lim Ju Hyun, co-president of Hanmi Pharmaceutical Co.

FOUNDING FAMILY NOT TO SELL HANMI PHARMACEUTICAL

Shin, who had sided with the brothers, on July 3 signed a deal to buy parts of stakes held by Song and her daughter for 164.4 billion won ($119.1 million) to support them.

“I made the deal to help (the family) solve the inheritance tax issues and protect Hanmi Pharmaceutical Co.,” Shin said. “None of the founding family members intend to sell Hanmi Pharmaceutical Co.”

The family has been looking for a way to finance their 500 billion won of combined inheritance taxes since the founder died in August 2020.

Shin and the two sons had been in talks with global private equity firms such as New York-based KKR & Co. and US investment firm Bain Capital LP, to sell stakes in Hanmi Science. 

In April, The Korea Economic Daily exclusively reported that the sons and KKR were in final negotiations to secure a combined 51% or more stake in Hanmi Science in a deal that KKR would buy shares in the holding company and guarantee the sons’ management rights.

The founding family and Shin secured a 55.73% stake in total with the agreement to end the feud. Song has 11.93%, while Lim Ju Hyun, Lim Jong-yoon and Lim Jong-hoon hold 10.43%, 10.14% and 10.8%, respectively.

Song on July 8 said she would step down as chair in a decision supported by Shin.

Write to Young-Ae Lee at 0ae@hankyung.com
 

Jongwoo Cheon edited this article.