The merger between the Hanmi Pharmaceutical Group and the OCI Group has been put to brakes, as Hanmi Science’s largest individual shareholder declared his support for the deceased group founder’s two sons, who oppose the merger.

Hanyang Precision Chairman Shin Dong-guk, a close confidant of the late Hanmi Pharmaceutical founder Lim Sung-ki and the largest individual shareholder of Hanmi Science, has come forward to support Lim’s two sons -- Jong-yoon and Jong-hoon -- putting the brakes on the Hanmi Pharmaceutical Group’s merger with the OCI Group.

"As a major shareholder of Hanmi Science and Hanmi Pharmaceutical, I intend to make a rational and appropriate decision within the scope of what I can for the company's corporate growth and enhancement of shareholder value," Shin said in a statement on Saturday, expressing his support for the two sons of the late Hanmi founder.

Shin is from the same hometown as the late Lim and the two were close friends when Lim was alive. Shin's 12.15 percent stake in Hanmi Science (8.49 million shares) is the largest among individual shareholders. This leads to speculation that he will act as a "casting voter" in the Hanmi Group’s management dispute.

Shin has been silent for more than two months since the late founder Lim’s wife, Chairwoman Song Young-sook, and daughter, President Lim Joo-hyun, pushed the merger of Hanmi Pharmaceutical Group and OCI Group earlier this year. However, with Hanmi Science’s shareholder meeting just a week away, Shin seems to have made clear his position as the largest individual shareholder.

"Since I joined the company as a shareholder in accordance with the will of the late founder Lim, I have been watching the company's development and corporate value enhancement from the sidelines for many years. I expect that the next generation of the family will work together to further develop the company after his passing," Shin said in a statement.

However, Shin added that while major shareholders have been focused on resolving personal issues, including inheritance taxes and mortgage loans, timely investment in management has been delayed, seriously damaging the company and shareholder value.

"I am extremely concerned and disappointed that in recent years, some of the major shareholders have reached a level where they have engaged in transactions that seriously affect the company's governance and management rights to resolve their economic issues without informing other major shareholders or major shareholders with significant equity interests of any matters related to the company's major management," he said.

Furthermore, Shin pointed out that it is highly inappropriate for these major shareholders to use foundations established under the will of the late founder to make decisions as if they were private companies.

“Therefore, I would like to contribute to the company's development and the restoration and enhancement of shareholder value by clearly expressing my intention as a major shareholder before the corporate value is further damaged," he said.

In particular, Shin criticized the company's delayed R&D, key personnel's departure, and significant decline in stock price during the current management's leadership.

"The deal surrounding the corporate control with a company not closely related to the Hanmi Pharmaceutical Group's business is understood to be a way to resolve the personal issues of the majority shareholders rather than for the long-term development of the company,” Shin said. “The fatigue of the company's employees is also very high as the company has been emitting various types of noise unrelated to the company's main business for several years by hiring small advisory firms.”

He continued, "I hope that brothers Lim Jong-yoon and Jong-hoon will quickly stabilize the company by forming a new board of directors and continue to explore follow-up measures for the company's long-term development and maximization of shareholder value. Ultimately, I hope that this crucial process will also involve the participation of the majority shareholder family and normalization of relations.”

After Shin, who holds the key to the vote, sided with the brothers instead of supporting the integration with OCI Group, Hanmi Science appealed to other individual shareholders to "take Hanmi's hand" later in the same day.

"We apologize to Chairman Shin, one of our major shareholders, for not fully explaining the details of our decision to integrate with OCI Group. We have explained the need for group integration and Hanmi's future value through various means but seem to have fallen short of satisfying Chairman Shin," the company said.

Nevertheless, the Hanmi Group must move forward into the future. The personal purposes of the majority shareholders never drove the integration with OCI Group. While inheritance tax financing was the basis for the integration, it does not explain the reason for the integration, Hanmi Science said.

Hanmi Science cited the following as current limitations: Pyeongtaek Bio Plant, which is losing about 70 billion won every year; Hanmi's limitation of being forced to develop drugs only at home due to various problems that halted the development of a new drug that was in global phase 3 with a partner; and the experience of having its valuable candidates returned because of the partner's management conditions, not because of the efficacy of the candidate.

"The board of directors has decided and judged that only by breaking through these limitations will we reach our vision of a global Hanmi. Many shareholders have voiced their concerns, and we are listening and aware of them," the statement said.

It continued, “However, emotional appeals must be separated from the company's future. We don't deny the sincerity of brothers Lim Jong-yoon and Jong-hoon. However, can Hanmi alone achieve a vision like the 200 trillion won market capitalization?"

"The shareholders' meeting that will decide the future of Hanmi Group will be held soon. It is crucial to determine whether Hanmi remains in the past or moves forward into the future. All employees of Hanmi Group are supporting and cheering for the current management team and have high expectations for the future value of Hanmi Group after the integration."

In addition, Hanmi Pharmaceutical Group said that the Hanmi Employees Association, comprised of about 3,000 employees of Hanmi Science, Hanmi Pharmaceutical, and Hanmi Fine Chemical, has expressed its intention to support the integration with OCI Group and will vote in favor of the integration at the upcoming shareholders' meeting.

Hanmi Pharmaceutical Group emphasized that the association members trust and support the current management team and look forward to Hanmi Pharmaceutical Group's emergence and advancement after the group integration.

However, the employee association’s support is unlikely to significantly impact the vote. The association holds about 230,000 shares or 0.3 percent of Hanmi Science's 69,956,940 outstanding shares.

"More important than the shareholding percentage itself is the meaning that all Hanmi employees support the integration with OCI," Hanmi Pharmaceutical said.