Hanmi Pharm 'Family Management Rights Dispute' Ends: Behind the Scenes [AK Radio]

The management dispute at Hanmi Pharm has effectively come to an end with the victory of the four-party alliance, raising expectations for management normalization as the new year 2025 approaches. Following the four-party alliance's win at the Hanmi Pharm shareholders' meeting on December 19 last year, the alliance declared cooperation just a week later on the 26th by purchasing a 5% stake in the holding company from Lim Jong-yoon, an inside director of Hanmi Science and a member of the founding family. This marks a new phase in the management dispute that had kept the industry on edge throughout the year.

With this share acquisition, the four-party alliance secured a 54% stake in Hanmi Science, laying the groundwork for stabilizing management control. Through this transaction, valued at 37,000 KRW per share and totaling 126.5 billion KRW, the alliance?comprising Chairwoman Song Young-sook and Vice Chairwoman Lim Joo-hyun (mother and daughter), Chairman Shin Dong-guk of Hanyang Precision, and La D?fense Partners?has firmly taken the lead in the group's governance structure.

Lim Jong-yoon and the four-party alliance agreed on three key points: first, the end of the management dispute; second, stabilization of the group's governance structure; and third, establishment of a sustainable management system centered on professional managers. Notably, the establishment of a professional management system is seen as the brother faction's acceptance of the four-party alliance's position, as the brothers Lim Jong-yoon and Lim Jong-hoon had each sought to directly lead Hanmi Pharm and Hanmi Science, respectively, to build a family-centered system.

According to the pharmaceutical industry, while the agreement appeared sudden on the surface, it was reportedly a foreseen step internally. Reports indicated that Lim Jong-yoon had attempted behind-the-scenes negotiations with the four-party alliance even before the shareholders' meeting on December 19, discussing conditions such as securing management rights for Beijing Hanmi Pharm. In fact, the brother faction had launched a strong offensive against the four-party alliance, especially the mother and daughter, before the meeting but halted all attacks once negotiations began.

A critical factor behind this agreement was the role of foreign institutional investors. Foreign institutional investors, who hold over 30% of Hanmi Pharm's shares, had firmly supported the four-party alliance even before the shareholders' meeting, which is analyzed as the key factor prompting the brother faction's decision. At the meeting, minority shareholders overwhelmingly voted for the four-party alliance, sending a clear signal that the market favors a professional management system.

Additionally, practical financial pressures contributed to the brother faction's retreat. With loan maturities for inheritance tax payments coming due monthly, they lacked the capacity to sustain a prolonged legal dispute. Notably, the brother faction did not attend the shareholders' meeting on the day itself. This absence was interpreted similarly to the mother and daughter’s no-show at the March 2024 Hanmi Science regular shareholders' meeting, where they anticipated a reversal defeat, signaling that the outcome had already been decided.

However, uncertainties remain, making it premature to view this agreement as a complete resolution. The biggest variable is that Lim Jong-yoon made decisions independently without prior consultation with his younger brother, Lim Jong-hoon, CEO of Hanmi Science. Furthermore, Lim Jong-yoon has not entered into a joint voting rights agreement with the four-party alliance regarding the remaining 6% of shares he holds.

Currently, the Hanmi Science board maintains a 5-5 balance, and CEO Lim Jong-hoon continues to serve in his role. If the four-party alliance attempts to remove CEO Lim Jong-hoon, a special resolution through an extraordinary shareholders' meeting would be required, but with only 54% of shares secured, obtaining the necessary two-thirds majority approval is challenging. This raises concerns about potential new conflicts in future management decision-making processes.

The reasons why the four-party alliance did not purchase all of Lim Jong-yoon’s shares are considered multifaceted. First, the enormous financial burden required for additional acquisitions was a factor, and they judged that the current majority stake was sufficient to address immediate challenges. Additionally, the mother and daughter faction likely intended to prevent further leakage of family shares to external parties.

The industry expects the four-party alliance to persuade CEO Lim Jong-hoon to transition to a professional management system by the regular shareholders' meeting in March. Based on the three agreed points, gradual changes are anticipated, which are expected to positively impact the stabilization of Hanmi Pharm’s governance structure.

Regarding Hanmi Pharm’s outlook for 2025, cautious optimism prevails. With the four-party alliance securing a majority stake and agreeing on management stabilization, extreme confrontations like those of the previous year are expected to be avoided. However, attention must be paid to differing interests within the four-party alliance itself. The mother and daughter faction, as the founding family, are committed to owner management; Chairman Shin Dong-guk has a strong financial investor profile; and La D?fense Partners take a purely investment-oriented stance.

In this context, the four-party alliance has formed a unified front through shareholder agreements guaranteeing joint voting rights, preemptive purchase rights, and tag-along rights. Nevertheless, the possibility of conflicting interests among the parties in the long term cannot be ruled out, making coordination and cooperation in future decision-making processes a critical challenge.

Ultimately, the true normalization of Hanmi Pharm’s management depends on how effectively the four-party alliance cooperates, grants appropriate authority and responsibility to professional managers, and smoothly manages relations with the remaining brother faction. The pharmaceutical industry hopes that this agreement will enable Hanmi Pharm to achieve management stabilization and focus on the development of its core pharmaceutical business.

Editor's Note

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