Yuhan-Kimberly splitting up
By Park Si-soo
The country’s leading health and hygiene company Yuhan-Kimberly is embroiled in a legal dispute with minor shareholder Yuhan Corporation filing a lawsuit against the largest shareholder Kimberly-Clark to prevent the latter obtaining a bigger presence in corporate management.
Industry insiders said the litigation could bring an end to the smooth relationship of the two shareholders that has lasted for 42 years. Yuhan-Kimberly was established in 1970 as a 60-40 joint investment by U.S.-based Kimberly-Clark and Seoul-based Yuhan.
Yuhan confirmed Tuesday that it has filed a suit against Kimberly-Clark’s Hungary office with the Seoul Central District Court, seeking an injunction to prevent Kimberly from appointing more directors to the board in the upcoming general meeting of shareholders.
A company spokesman, however, refused to make further comment on the issue.
The Hungary office currently owns a 70 percent stake in Yuhan-Kimberly and has formally raised a request to fill five out of seven director positions at a shareholders meeting on July 3.
At present, the joint venture’s board is comprised of four directors appointed by Kimberly and three by Yuhan, a proportion that has remained unchanged since the birth of the company.
The dispute first came to the surface in 1998 when Yuhan sold a 10 percent stake in the firm to Kimberly-Clark amid a rapid downturn in the domestic economy. The sale dropped Yuhan’s stake in Yuhan-Kimberly to 30 percent, giving Kimberly a greater say in deciding managerial affairs.
Despite that the 4:3 ratio of directors has remained unchanged in order not to affect the long-running partnership.
However, Kimberly started openly vent its frustration over the state of affairs, raising objections to a Yuhan-initiated call for sacking Yuhan-Kimberly executives. The two have frequently been at odds with each other over other managerial decisions, observers said.
Kimberly claims wielding more influence in the joint venture is justifiable as long as it holds a controlling stake, while Yuhan refutes it saying the 4:3 ratio should remain unchanged to maintain the ”healthy partnership” of the two parties.
Some analysts say Yuhan’s struggle to keep the ratio will intensify since profits stemming from the joint venture are far bigger than that of its own medicine business.
Yuhan Corporation, a leading medicine provider established in 1926, has seen its sales declining. It posted 679 billion won in sales and 49 billion in operating profit last year.
Yuhan-Kimberly ㅡ a dominant player in all involved categories such as diapers, sanitary napkins and bathroom tissue ㅡ posted 135 billion won in operating profits last year on 1.3 trillion won in sales.