Kolmar Korea Group is facing its biggest crisis in 35 years since its founding. A conflict over management rights among family members has escalated into a stock return lawsuit involving founder Yoon Dong-han, marking a turning point in the group's succession structure. As this unprecedented situation dubbed the 'father-son lawsuit' draws in U.S. activist funds, analysts suggest that this incident has gone beyond a simple owner risk.
According to related industries on the 21st, Chairman Yoon stepped down from management in 2019 and donated his 28.18% stake in Kolmar Holdings to his eldest son Yoon Sang-hyun, who is currently the largest shareholder with a 31.75% stake. Chairman Yoon's eldest daughter Yoon Yeowon, CEO of Kolmar BNH, holds 7.6%, while Chairman Yoon holds a 5.59% stake in Kolmar Holdings. Meanwhile, U.S. activist fund Dalton Investments has secured a 5.69% stake and entered the board, becoming a key variable in the management structure.
◇ Internal conflicts that shattered the 'quiet succession'
The starting point of this conflict was a tripartite agreement signed in 2018. Chairman Yoon entrusted Kolmar Korea and Kolmar Holdings to his eldest son and Kolmar BNH to his eldest daughter, with himself coordinating the entire group. Once regarded as a model case of 'quiet succession,' cracks began to emerge following poor performance in Kolmar BNH.
As Vice Chairman Yoon Sang-hyun attempted to enter the board with external personnel and push for a temporary shareholders' meeting, CEO Yoon Yeowon filed for a provisional injunction with the court. Subsequently, Chairman Yoon filed a civil lawsuit on May 30 demanding the return of 2.3 million shares of Kolmar Holdings (equivalent to 4.6 million shares after stock split) that he had donated to his eldest son. Chairman Yoon claimed that 'the donation was based on a management agreement, and the current management order is being undermined.' In contrast, Vice Chairman Yoon's side maintained that 'management rights and the donation are separate matters.'
The key issue is the legal efficacy of the 'management agreement' and 'donation contract.' Depending on the court's judgment, not only the governance structure of Kolmar Holdings but also the core practices of succession in Korean conglomerates could be impacted.
◇ 'Father and daughter vs. son and Dalton'… Spreading competition over equity
The dispute is spreading into a competition for equity, entangling external forces beyond the family. Dalton increased its stake to 5.69% in March this year and declared 'participation in management.' The likelihood of an alliance with Vice Chairman Yoon Sang-hyun is gaining weight.
Currently, the main shareholder structure of Kolmar Holdings consists of Vice Chairman Yoon Sang-hyun (31.75%), CEO Yoon Yeowon (7.6%), Chairman Yoon Dong-han (5.59%), and Dalton (5.69%). The remaining 38.55% belongs to minority shareholders. A three-way structure has formed, with the 'founder and eldest daughter' and 'eldest son and activist fund' alliance, as well as the voting power of minority shareholders, suggesting that management rights could diverge during the shareholders' meeting and board restructuring process.
This management dispute at Kolmar Korea is also cited as a case where external capital is actively intervening in the family management structure of the owner, shaking the traditional owner-centered management order. The U.S. activist fund Dalton Investments secured over 5% of Kolmar Holdings' equity and declared participation in management, leading external forces to firmly join the ongoing sibling conflict. Consequently, a multi-faceted structure has emerged with the alliance of the founder and eldest daughter, the eldest son and Dalton, alongside the voting power of more than 38% of minority shareholders.
Particularly in this situation, it is not possible to predict the outcome simply based on equity ratios. With minority shareholders holding 38.55%, their voting power could significantly influence the direction of management rights during the upcoming shareholders' meeting or board restructuring. Unlike in the past, where outcomes were determined by the owner family and a few major shareholders, the previously sidelined minority shareholders have emerged as a key variable.
The combined structure of external activist capital and minority shareholders challenging the owner-centered management order demonstrates the potential for a transition in Korea's conglomerate-centered governance structure. Analysts believe that this dispute could serve as an opportunity for 'shareholder democracy' to take root beyond a simple family feud.
◇ Stock price surges with expectations of equity competition… “Risks if prolonged”
On the 18th, when the management dispute became known, the stock price of Kolmar Holdings surged by 29.99% from the previous day, closing at 15,950 won, setting a new 52-week high. Kolmar BNH also rose by 4.28%, showing a simultaneous strength.
On the following day, the 19th, the stock price of Kolmar Holdings closed at 17,440 won, up 9.34% from the previous day. In contrast, Kolmar BNH decreased slightly to 15,150 won, down 1.3%.
Normally, management disputes increase corporate uncertainty and act as a negative factor on stock prices, but in this case, expectations for competition over equity have instead stimulated investor sentiment. Especially with minority shareholders holding over 38%, the competition for votes and stock purchases among factions acted as a short-term catalyst for the stock price increase.
However, there are warnings in the securities sector that if the dispute prolongs or there is continued management vacancy, it would inevitably have a negative impact on the group's overall performance.
Lee Kyung-yeon, a researcher at Daishin Securities, analyzed that 'the structural changes surrounding Kolmar Holdings, from the entrance of activist funds to the potential changes in major shareholders' equity, show that governance factors are acting as key variables driving stock prices in the market.'
He noted that 'the structural changes surrounding Kolmar Holdings are still ongoing,' adding that 'investors have already begun to consider both the opportunities and risks that activism and governance restructuring will bring.'