[Exclusive] Lee Woo-hyun, OCI Chairman: "M&A with Hanmi Pharm is a Cooperation Model, Not Integration"

First Commute Interview After Korea-US Integration Announcement
Emphasizing Cooperation, Determined to Persuade Brothers Im Jong-yoon and Jong-hoon
Targeting Overseas Business in Southeast Asia Including Pharmaceuticals and Bio

Lee Woo-hyun, Chairman of OCI Group, is meeting with reporters and giving an interview at the OCI headquarters in Sogong-dong, Jung-gu, Seoul on the 24th. Photo by Jeong Dong-hoon

Lee Woo-hyun, Chairman of OCI Group, stated regarding the merger and acquisition (M&A) with Hanmi Pharmaceutical Group, "We are considering a model of cooperation rather than integration between the groups." This is interpreted as emphasizing a physical union based on mutual respect rather than a chemical integration where one side unilaterally absorbs the other, especially as brothers Lim Jong-yoon, President of Hanmi Pharmaceutical, and Lim Jong-hoon, CEO of Hanmi Precision Chemical, have opposed the integration and initiated legal action. This is the first time Chairman Lee has presented a specific management model following the M&A. Regarding the failed second meeting with President Lim Jong-yoon, he said, "Since legal measures are underway, I am cautious," but added, "I can meet anytime."

In a 25-minute interview with reporters on the 24th at OCI headquarters in Sogong-dong, Jung-gu, Seoul, Chairman Lee said about the M&A, "Hanmi Pharmaceutical Group is a group of experts, and we judged that by bringing them in well, we (OCI Group) can assist." Currently, Lim Jong-yoon and Lim Jong-hoon, the eldest and second sons of the late founder Lim Sung-gi, have filed an injunction to prohibit new share issuance, putting a brake on integration discussions. Chairman Lee showed an intention to explain the purpose of the integration to these brothers.

Regarding the injunction, Chairman Lee said, "They did not sue us (OCI), and I have not even seen the injunction documents," adding, "Chairman Song (Song Young-sook of Hanmi Group) must have her thoughts, and we must follow the opinions of those (Hanmi Pharmaceutical Group management). We cannot make independent decisions alone." He continued, "Chairman Song and President Lim Joo-hyun both care deeply about the company, and I believe President Lim Jong-yoon also has the same heart for the company," adding, "It’s just that the way of expression might be a bit different. It could be well resolved." He said, "President Lim Jong-yoon of Hanmi Pharmaceutical is the major shareholder of the group and someone we need to cooperate with. I can explain (about cooperation) anytime."

When asked if he did not anticipate opposition to the merger, he said, "You cannot publicly talk about strategic matters like M&A," and added, "Just because you spend a lot of time does not mean it will succeed; I focused on what would help the company."

After returning from a business trip to Malaysia following the integration announcement, Chairman Lee emphasized, "If you go to markets where everyone is already present, you are late," and said, "More than 80% of OCI’s sales come from overseas, and we have a DNA that always challenges unexplored fields." Regarding entry into the pharmaceutical and bio sectors, he said, "If you do business based only on what you know from the past, you cannot make new attempts," and stated, "We will leave the expert areas in pharmaceuticals and bio to the experts, and OCI will contribute by pioneering overseas markets."

He also emphasized the growth potential of the Southeast Asian pharmaceutical market. He said, "The birth rate in Southeast Asia is about 2.7, and by 2035, the economic power of Southeast Asia will be larger than the combined size of Korea and Japan," adding, "Living standards will improve, and if R&D and marketing are well done, the business growth potential is high. Our investment in Bukwang Pharmaceutical is in the same context, and (Hanmi Pharmaceutical Group) also wants to pursue such overseas business models."

OCI Group and Hanmi Pharmaceutical Group announced that they signed an agreement on the integration between the groups through each company’s in-kind contribution and new share issuance acquisition, following resolutions by each company’s board of directors on the 12th. Under this agreement, OCI Holdings will acquire a total of 27.0% of Hanmi Science shares, including 18.6% through existing shares and in-kind contributions and 8.4% through new share issuance, by investing 770.3 billion KRW. Major shareholders of Hanmi Science, including President Lim Joo-hyun, will acquire 10.4% of OCI shares. OCI Holdings will form a joint board of directors by appointing two inside directors, including one representative director from each group. Chairman Lee Woo-hyun of OCI Holdings and President Lim Joo-hyun of Hanmi Science will serve as co-CEOs.