Han & Company, the 'Saving Hands' of Hanon Systems and SK Shipping, Once Again~

Improving Owner-Centered Governance Structure at Namyang Dairy to Enhance Corporate Value
Also Interested in 'Bolt-On' Strategy with Additional Acquisitions of Businesses Highly Related to Core Operations

[Asia Economy Reporter Lim Jeong-su] Han & Company, a domestic native management participation private equity (PE) firm, will improve the governance and decision-making structure of Namyang Dairy Products after acquiring the controlling stake. The plan is to enhance corporate value by improving the owner-centered decision-making structure and increasing management efficiency. The industry is also paying close attention to the bolt-on strategy, which involves acquiring additional companies with high business relevance.

Han & Company announced on the 27th that it will purchase a 53% controlling stake held by the Namyang Dairy Products owner family for 310 billion KRW. Namyang Dairy Products recently became the subject of a prosecution investigation due to controversy over false advertising claiming that Bulgari yogurt was effective against COVID-19. It is interpreted that former chairman Hong Won-sik decided to sell his shares, recognizing that trust recovery is difficult under the current governance structure.

Han & Company plans to focus on revitalizing Namyang Dairy Products' management going forward. First, after acquiring Namyang Dairy Products, it will apply the executive officer system. The executive officer system independently organizes professional executive officers responsible for business execution separately from the board of directors, which performs decision-making and supervisory functions. This decision-making structure is mainly applied to investment companies. It has the advantage of strengthening the board's supervisory function and increasing the accountability of the executive team. The intention is to rationalize the owner-centered decision-making structure, which has been raised as an issue at Namyang Dairy Products.

Han & Company is one of the leading domestic native PEs with assets under management (AUM) of 9.4 trillion KRW as of the end of Q1 this year. It has strengths in manufacturing investments such as cement, shipping, and automotive parts by acquiring companies like Ssangyong Cement, Hanon Systems, and SK Shipping.

In 2014, Hanon Systems (then Halla Visteon Climate Control) was acquired and transformed into a global leader in eco-friendly vehicle thermal management. Additionally, SK Shipping, acquired in 2018, expanded its business mainly through new long-term contracts and improved its financial structure, becoming a profitable shipping company. It also acquired K Car, a used car sales company, elevating it to a leading domestic used car company.

A Han & Company official stated, "After acquiring companies, we have increased corporate value through investments aimed at improving corporate health and strengthening competitiveness," adding, "We will actively invest and enhance management transparency to regain the trust of consumers and dealers and transform Namyang into a beloved new brand."

Whether to use the bolt-on strategy, acquiring additional companies with high business relevance to increase corporate value, is also attracting attention. After acquiring Woongjin Foods in 2013, Han & Company additionally acquired Dongbu Farm Gaya and Daeyoung Foods before selling them to Taiwan's distribution company Tongyi Group at the end of 2018. The bolt-on strategy has also been continuously applied to the cement industry, including Ssangyong Cement and Daehan Cement.

There is also speculation about the possible sale of non-core assets or affiliate spin-offs. Namyang Dairy Products owns two unlisted subsidiaries, Geumyang Heungup and Healthy People (formerly Namyang F&B). These companies are 100% invested by Namyang Dairy Products to operate real estate leasing and beverage manufacturing businesses.

An industry insider said, "Han & Company sold Ssangyong Enertech, owned by Ssangyong Cement Industrial, to Geukdong Petrochemical, Ssangyong Materials to Unison, and last year sold Ssangyong Information & Communications to ITCEN," adding, "The possibility of spin-off sales of Namyang Dairy Products' affiliates cannot be ruled out."