November 21, 2024

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Hanmi Pharmaceutical Group headquarters office in Seoul (Hanmi Pharmaceutical)

The management conflict within the founding family of Hanmi Pharmaceutical Group ended, as the sons of founder Lim Sung-ki -- Lim Jong-yoon and Lim Jong-hoon -- secured a majority within Hanmi Science’s board at the general meeting of shareholders last week. However, there are still multiple hurdles for the Lim brothers to get the country’s leading pharmaceuticals company back on track.

According to industry sources Sunday, the Lim brothers are likely to attempt to repair the relationship with other family members before convening a board meeting.

Their mother, Song Young-sook, and sister, Lim Joo-hyun, had attempted to push ahead with a merger with local chemicals manufacturer OCI to position Hanmi as a pharmaceuticals and chemicals giant like Germany’s Bayer. But the merger plan met with resistance from the sons, who worried about their limited control in the merged entity.

Even though the Lim brothers succeeded in securing their control by winning a majority on the board, it seems crucial for them to mend the soured ties with their mother and sister, who hold significant a share of the group. Song is also chair of the board.

Before last week’s general meeting, Song named her daughter as the legitimate successor to Hanmi Group while criticizing the sons for “being interested in selling their stocks at higher prices.”

Another tricky issue is the inheritance tax facing remaining family members, which sparked the family feud in the first place.

After Lim, the Hanmi patriarch, passed away in August 2020, Song inherited 6.98 million shares from her husband, while his sons and daughter received 3.54 million stocks each. The total value of the inherited stocks reached over 1 trillion won ($743 million), adding up to 540 billion won of inheritance tax for the family. They have been paying the tax, but the remaining portion still stands at some 270 billion won.

With the merger completely called off, the sons are now required to reveal their plan to pay the tax.

After the general meeting, the sons announced they aim to increase the group’s net profit to 1 trillion won in five years, hinting at a major executive reshuffle. But they have remained mum over the tax payment.

By Shim Woo-hyun (ws@heraldcorp.com)
The Korea Herald