The merger of South Korea’s pharmaceutical holding firm Hanmi Science Co. and chemicals giant OCI Holdings Co. is likely to gain momentum as National Pension Service (NPS), which owns a 7.66% stake in Hanmi Science, has decided to support the drugmaker’s board at the general shareholders meeting on March 28.
NPS’ Special Committee on Responsible Investment and Governance decided on March 27 to vote in favor of the appointment of six new directors, all proposed by Hanmi Science’s board, at the shareholders' meeting on Thursday.
The board chair is Song Young-sook, Hanmi Pharmaceutical Group’s late founder Lim Sung-ki’s wife. She is pushing for the Hanmi-OCI merger with her daughter Lim Ju Hyun, co-president of Hanmi Pharmaceutical Co., and OCI Chairman Lee Woo-hyun.
The pension fund decided to vote against the appointment of all five new directors recommended by the Hanmi founding family’s two sons, Hanmi Pharmaceutical Co-President Lim Jong-yoon and Hanmi Fine Chemical Chief Executive Lim Jong-hoon. The two brothers oppose the merger plan, while their mother and sister are pushing for it.
Song Young-sook, chair of Hanmi Science (left), Lim Ju Hyun, co-president of Hanmi Pharmaceutical (Courtesy of Yonhap News)
IN FAVOR OF MOTHER, SISTER
NPS usually remains neutral on control issues involving its portfolio companies. The pension scheme decided last week to vote for KT&G Corp. CEO candidate Bang Kyung-man, who was recommended by the tobacco maker’s board, and outside director candidate Son Dong-hwan, who was proposed by KT&G’s top shareholder Industrial Bank of Korea (IBK).
The pension fund’s support for Hanmi Science's board was influenced by a local court’s decision, which was announced on the morning of March 26.
The court rejected an injunction request filed by the Lim brothers to prevent Hanmi Science’s new share issuance worth 240 billion won ($178.2 million) for the merger with OCI. Given that Hanmi Science's board has been considering strategic alliances with other companies for two years, it seems that the board’s decision (on the new share issue) should be respected, the court said.
As NPS sided with the Hanmi Science board, the merger is more likely to move forward. The holding firm’s shareholders who will vote in favor of the board’s proposals are 2.09 percentage points higher than those who will vote for the Lim brothers’ proposals.
Lim Jong-yoon, Hanmi Pharmaceutical co-president (left), Liom Jong-hoon, Hanmi Fine Chemical CEO (Courtesy of Yonhap News) BROTHERS FIGHT BACK
Control of Hanmi Science is expected to depend on the votes of minority stakeholders at the shareholders meeting. The two brothers may sit on the board according to the decision of the minority stakeholders, who own a combined 16.77%.
Hanmi Science will elect six board directors at the meeting on March 28. Out of 11 candidates proposed by the board and the Lim brothers, six candidates who receive the most votes will be elected.
Meanwhile, the brothers are set to file an injunction request to ban their mother and sister from exercising their voting rights of two foundations, the photographic art-focused Gahyeon Foundation and bio research-focused Lim Sung-ki Foundation.
As a part of Chairperson Song’s affiliated persons and entities, the two foundations hold a combined 7.9% stake in Hanmi Science. The Lim brothers argue that it is highly inappropriate for the foundations, established under the late founder’s will, to be used by some shareholders’ private companies.
Write to Byeong-Hwa Ryu and Jong-Kwan Park at hwahwa@hankyung.com Jihyun Kim edited this article.
