SEOUL-- The sale of South Korea's No. 2 dairy firm Namyang Dairy Products Co. fell through Wednesday as it renounced a contract to sell a controlling stake.
Three months earlier, Namyang Dairy Products Chairman Hong Won-sik and his family signed a deal with local private company Hahn & Company to sell a 53 percent stake for 310.7 billion won (US$268 million).
In a statement, Hong said the company informed Hahn & Company of its decision to rescind the stake sale contract.
"Hahn & Company has unfairly intervened in Namyang Dairy Products' managerial affairs even before the stake sale and violated a confidentiality clause in order to complete the deal in its favor," Hong claimed.
Hahn & Company immediately hit back, saying the contract remains valid.
"Hong's claims are totally groundless. The contract still holds true, and a local court has issued an injunction barring Hong from disposing of his stake at will," it said.
Earlier, Namyang Dairy Products had abruptly postponed an extraordinary shareholder meeting, slated for July 30, to approve the stake sale deal.
On Aug. 23, Hahn & Co. filed a lawsuit with a Seoul court against Hong and his family members, which stated they should promptly carry out the duty of concluding the transaction.
Hong decided to sell Namyang Dairy Products after he offered to resign from his post in May for causing a misunderstanding about the company's popular yogurt drink with claims it can prevent COVID-19 infections.
Hong is not in charge of day-to-day company operations, but the chairman and his family members have wielded a large influence on the company founded in 1964 with their controlling stake.
Hong's offer to quit came three weeks after Namyang's research chief said in a symposium that Bulgaris yogurt reduces the chance of novel coronavirus infection by 78 percent.
The claim sharply boosted sales of the yogurt drinks and its stock prices, but experts later questioned the credibility of that claim as researchers had yet to conduct animal testing and clinical trials.
Source: Yonhap News Agency