A consortium of UAMCO (United Asset Management) and Taekwang Industrial will become the new owner of Dong Sung Bio Pharm, which entered corporate rehabilitation after a management control dispute between an uncle and a nephew. The consortium decided to acquire management control of Dong Sung Bio Pharm by injecting a total of 160 billion won.
Initially, the liquidation value of Dong Sung Bio Pharm was estimated at about 85 billion won, but its price doubled during the competitive bidding process. The price surged as SM Group also joined the race to acquire Dong Sung Bio Pharm. Once the M&A is finalized, the management control dispute led by the marketing company Brand Refactoring, which stood as an ally of former Dong Sung Bio Pharm Chairman Lee Yang-gu, will also come to an end.
On the 14th, the UAMCO and Taekwang Industrial consortium said it will inject 160 billion won to normalize management at Dong Sung Bio Pharm. Of that, 140 billion won will go toward the acquisition of management control, and the remaining 20 billion won will be used as funds for normalizing the company's operations. Once the funds are injected, Dong Sung Bio Pharm plans to first repay 90 billion won in liability. The company's current liability is about 86 billion won, and once the funds are executed, all liabilities can be settled at once.
The consortium will participate in a 70 billion won third-party paid-in capital increase to be carried out by the company and will acquire 50 billion won in convertible bonds (CB) and 40 billion won in corporate bonds. UAMCO and Taekwang Industrial will each shoulder 80 billion won.
Earlier, Dong Sung Bio Pharm applied to the court for corporate rehabilitation due to a management control dispute, alleged embezzlement and breach of duty by former management, and a deteriorating financial structure. The court accepted the request, and the rehabilitation process began. During rehabilitation, Dong Sung Bio Pharm pursued an open sale of the company using a stalking-horse method (selecting a preliminary acquirer first and then deciding the final acquirer through an open bid).
Initially, the expected sale price of Dong Sung Bio Pharm was dominated by the view that it would be around the liquidation value of 85 billion won. However, its price doubled during the competitive bidding process. SM Group also participated in the acquisition battle by fronting its affiliate Najin, but Dong Sung Bio Pharm selected UAMCO as the stalking horse after UAMCO offered the highest price.
Taekwang Group's entry also appears to have helped expand the game surrounding Dong Sung Bio Pharm. The company's price rose to 140 billion won.
Taekwang Industrial plans to accelerate the expansion of its beauty and healthcare business through the acquisition of Dong Sung Bio Pharm. Taekwang Industrial is strengthening its household goods and beauty businesses through the acquisition of Aekyung Industrial Co. and the establishment of cosmetics corporation SIL, and it expects to create synergies with Dong Sung Bio Pharm's over-the-counter medicine Jeongro-hwan, hair dye Seven-Eight, and hair growth product Dongsung Minoxidil.
Taekwang Group has recently been aggressively pursuing acquisitions amid talk of a possible return of former Chairman Lee Ho-jin, once called the "maestro of M&A." The industry views Taekwang Group's latest moves as a strategic gambit not only for business expansion but also for restructuring governance and facilitating a succession of management control.
If it acquires the suspended Dong Sung Bio Pharm and normalizes its management, it could become a useful card in future mergers with core group affiliates or during equity swap processes. In particular, there is talk that Taekwang Industrial may establish a healthcare holding company by leveraging Aekyung Industrial Co. and Dong Sung Bio Pharm and use it as a lever for succession for former Chairman Lee Ho-jin's eldest son, Hyun-joon.
The rehabilitation process for Dong Sung Bio Pharm is expected to be completed once the UAMCO consortium pays the full consideration. Dong Sung Bio Pharm's stock transactions were also suspended amid the management control dispute. After former Chairman Lee Yang-gu, son of late founder Lee Seon-gyun, stepped down from management, he suddenly transferred his equity to Brand Refactoring, triggering the management control dispute.
Brand Refactoring, which had seized management control during the dispute, is still pushing back. It has claimed it would prepare a plan to normalize management, including an injection of 20 billion won into Dong Sung Bio Pharm.