Kolmar Group Chairman Yoon: A Rare Case Of "I Want My Shares Back"

• Chairman Yoon Dong-han, founder of the Kolmar Group, has filed a lawsuit against his eldest son, Vice Chairman Yoon Sang-hyun of Kolmar Holdings, demanding the return of Kolmar Holdings shares.

• This is a rare case of a chairman demanding his shares back from his son.

• A key question is can there be an M&A fight for Kolmar Holdings even without the father getting his shares back? And the answer would be yes.

Shares of Kolmar Korea Holdings (024720 KS) surged 29.3% today to reach 15,880 won. Kolmar Holdings' share is up 134% YTD. It was reported that Chairman Yoon Dong-han, founder of the Korea Kolmar Group, has filed a lawsuit against his eldest son, Vice Chairman Yoon Sang-hyun of Kolmar Holdings, demanding the return of Kolmar Holdings shares.

The lawsuit was filed at the Seoul Central District Court on 30 May. Chairman Yoon wants to receive back the shares that he gave to his son Yoon Sang-hyun as a gift in 2019. Unlike other cases where the shares transferred from chairman to children are given as gifts without any obligation, this gift that Chairman Yoon gave to his son had a clause which included an obligation on his son to pay a certain amount of compensation.

Basically, Chairman Yoon's children (Yoon Sang-hyun - son and Yoon Yeo-won - daughter) have been fighting over the management rights of Kolmar BNH. Their father Chairman Yoon does not want his children to fight over this. Yoon Yeo-won is the Kolmar BNH CEO. Chairman Yoon has been trying to mediate this dispute between his children but has not been able to do so.

In September 2018, Chairman Yoon, Vice Chairman Yoon Sang-hyun, and CEO Yoon Yeo-won signed a three-party management agreement regarding the future governance structure of Kolmar BNH and Kolmar Holdings. The agreement included a plan for Vice Chairman Yoon Sang-hyun to be in charge of the cosmetics and pharmaceutical business through Kolmar Holdings and Kolmar Korea.

On the other hand, CEO Yoon Yeo-Won would be in charge of the health functional food business through Kolmar BNH. This agreement also included provisions to guarantee CEO Yoon Yeo-won’s independent and autonomous business management rights at Kolmar BNH.

Chairman Yoon donated 2.3 million shares of Kolmar Holdings shares (currently 4.6 million shares through a bonus issue) to Vice Chairman Yoon Sang-hyun in December 2019 as a prerequisite for this agreement. With the donation contract, Vice Chairman Yoon became the largest shareholder (30.25%), holding 5.4 million shares out of 17.9 million shares issued.