The Seoul Central District Court ruled in favor of Hahn & Company’s lawsuit against the chairman of Namyang Dairy Products, ordering the chief to sell his majority stake in the company.
“The shareholders of Namyang Dairy Products must execute the share transfer agreement as stated in the contract,” the court said Thursday.
Hong Won-sik, chairman of Namyang Dairy Products, has signed a share purchase agreement with Hahn & Company to sell a combined 53.08% stake in the company that he and related shareholders hold for $310.7 billion. won ($220 million) in May last year.
The deal was signed after Namyang Dairy Products was caught up in controversy when it claimed its yogurt drink Bulgaris could prevent people from catching Covid-19. Following the broadcast, Hong said he would step down as chairman and signed the deal with Hahn & Company.
The chairman and related shareholders called off the deal in September last year after Hahn & Company filed a lawsuit demanding the company complete the sales.
Hong says he called off the deal because Hahn & Company tried to influence management even though the stock sale had not yet taken place.
He also claims the private equity firm promised to spin off Baekmidang, an ice cream franchise run by Namyang Dairy Products, and exclude it from sale in an unofficial deal, but details were not included. in the share purchase agreement. Hong’s appointment as an executive advisor to Namyang Dairy Products after the shares were sold was also part of the unofficial promise, but also not included in the deal.
Despite the milk manufacturer’s claims, the court found that the sale agreement was still in effect and ruled that Chairman Hong and related shareholders must sell their stake in Namyang Dairy Products to Hahn & Company.
Chairman Hong said he plans to immediately appeal the decision.
Although Hong is trying to fight back, Hahn & Company has announced its intention to get the 53.08% stake as soon as possible.
“We hope that Chairman Hong will accept the court’s decision and quickly transfer the management rights,” Hahn & Company said in a statement Thursday.
BY LEE TAE-HEE [[email protected]]