Taekwang Group, which had been in conflict with Aekyung Group over the acquisition of Aekyung Industrial Co., reached a dramatic agreement. The two companies plan to complete payment of the acquisition price at the end of March.
According to the investment banking (IB) industry on the 19th, the two companies on this day reached a final agreement for the transfer of management control of Aekyung Group.
The sale price was finalized at 447.5 billion won, a 5% discount from the price agreed at the time of the stock purchase agreement (SPA). The sale price for the 63% management-control equity in Aekyung Industrial Co. that the two sides agreed on was about 470 billion won.
Taekwang Group had argued until recently that the acquisition price should be lowered due to the "2080 toothpaste recall" incident. The 2080 toothpaste is one of Aekyung Industrial Co.'s flagship products.
Early last month, a banned ingredient was detected in some 2080 products manufactured in China and distributed in Korea, prompting Aekyung Industrial Co. to recall all of those products. Citing this, Taekwang Group maintained that the brand image had been damaged and that transaction terms needed to be changed, including a downward adjustment of the acquisition price.
As the gap between the two sides' expectations did not narrow, concerns emerged that the deal closing deadline scheduled for the 19th would be missed. There was considerable pessimism that the negotiations themselves would fall apart.
However, because the purpose of selling Aekyung Industrial Co. was to resolve Aekyung Group's financial problems, the two companies were said to have found common ground on a broader basis.
Taekwang Group is expected to complete payment of the acquisition price at the end of March and fully acquire management control of Aekyung Industrial Co.
By succeeding in this negotiation to sell Aekyung Industrial Co., Aekyung Group has overcome its financial crisis and gained breathing room. Earlier, in Aug., Aekyung Group sold Jungbu CC to The Siena Group, securing 169 billion won in cash.