Hanmi Science Announces 'Value-Up Strategy' Today... Public Opinion Battle Ahead of Extraordinary General Meeting

Hanmi Group Mother and Son's Dispute Escalates with Affiliate Involvement
Minority Shareholders' Sentiment Likely to Decide Outcome of Extraordinary General Meeting

As the conflict between the Hanmi Pharmaceutical mother and son continues throughout the year, Hanmi Science, representing the brothers, is intensifying a public opinion campaign among minority shareholders ahead of an extraordinary general meeting.

[Image source=Yonhap News]

Hanmi Science, representing the brothers, will hold a "Hanmi Group Value-Up and Mid-to-Long-Term Growth Strategy Press Conference for Enhancing Corporate Value" at 2 p.m. on the 7th. This is interpreted as an effort to win the support of minority shareholders ahead of Hanmi Science's extraordinary general meeting on the 28th, which will discuss expanding the board of directors, and Hanmi Pharmaceutical's extraordinary general meeting on the 19th of next month, which will address the dismissal of CEO Park Jae-hyun.

The press conference is expected to announce the formation of a new management system. After winning the management rights battle against the mother and daughter side in June, the brothers revealed plans to establish a "New Hanmi" management system. They proposed a "Korean-style Lonza" as the next-generation growth model for the Hanmi Pharmaceutical Group and expressed their intention to actively engage in contract development and manufacturing organization (CDMO) business. Through this, they set a goal to attract 1 trillion won in investment and achieve 1 trillion won in net profit.

The Hanmi Pharmaceutical management dispute began in January when Song Young-sook, chairwoman of Hanmi Pharmaceutical Group, and Lim Joo-hyun, vice chairman of Hanmi Science, mother and daughter, announced a merger with OCI Group to prepare for inheritance tax. Song’s sons, brothers Lim Jong-yoon and Jong-hoon, opposed this and, on March 28, won the Hanmi Science regular shareholders' meeting vote by gaining support from minority shareholders and Shin Dong-guk, chairman of Hanyang Precision, defeating the mother and daughter side.

However, the brothers’ position appears to be shaking again. The mother and daughter exercised a casting vote at the regular shareholders' meeting and turned Chairman Shin Dong-guk, who had sided with the brothers, to their side in July, forming a "three-party alliance" and securing a majority stake. It is known that Chairman Shin’s decision was influenced by concerns over the lack of significant achievements regarding inheritance tax issues and additional funding for growth, despite the brothers having controlled the group’s management for over three months.

The representative of the Hanmi Science minority shareholders' coalition declared support for the three-party alliance on the 1st of this month, shaking the minority shareholders’ sentiment. Since the brothers’ victory in March, family conflicts have continued, including Chairwoman Song’s dismissal from co-CEO of Hanmi Science, and with the stock price continuously falling, minority shareholders’ dissatisfaction has grown. Although some minority shareholders eventually withdrew their support in protest, the press conference held on this day is also seen as part of measures to persuade wavering minority shareholders.

The reason minority shareholders’ votes are important is that neither side currently holds a stable majority stake. Therefore, the minority shareholders’ votes are expected to determine the outcome of the extraordinary general meetings. According to the Financial Supervisory Service’s electronic disclosure system, the current shareholding structure of Hanmi Science is 48.13% for the alliance side and 29.07% for the brothers. It is difficult to be confident about either the three-party alliance’s victory or the brothers’ defense.

The National Pension Service, holding 6.04% of shares, opposed all director appointment proposals recommended by the brothers at the Hanmi Science shareholders' meeting in March, and after the brothers gained momentum, also opposed all director candidates except CEO Lim Jong-hoon at the Hanmi Pharmaceutical shareholders' meeting, so it is expected to side with the three-party alliance.

Accordingly, the brothers are struggling to win the support of minority shareholders. Besides the value-up and mid-to-long-term growth strategy press conference on this day, the Hanmi Group affiliate representatives’ statement supporting the brothers on the 4th is widely regarded in the industry as part of a public opinion campaign to win minority shareholders’ votes. The Hanmi Group affiliate representatives issued a joint statement on the 4th criticizing Hanmi Pharmaceutical’s independent management approach. The affiliate representatives are known to be aligned with the brothers. Earlier, in August, the three-party alliance began full-scale independent management of Hanmi Pharmaceutical centered on professional CEO Park Jae-hyun, implementing organizational restructuring such as establishing HR and legal teams.

The capital reduction dividend proposal passed at the Hanmi Science board meeting on September 27 is also seen as a measure by the brothers to win back minority shareholders’ support. A capital reduction dividend is a dividend paid by reducing the company’s capital reserve. Unlike regular dividends, corporate shareholders do not include it in profit, and individual shareholders do not include it in dividend income, so a 15.4% dividend income tax is not imposed.