Taekwang Industrial Lowers Aekyung Acquisition Price Following Toothpaste Recall

Taekwang Industrial has adjusted the acquisition price for Aekyung Industrial and postponed the closing date of the transaction, following a recent recall of Aekyung’s ‘2080 Toothpaste’ due to the detection of a banned ingredient.

Acquisition Price Adjustment

On February 19th, Taekwang Industrial announced a revision to its agreement to acquire 8,336,288 shares (a 31.56% stake) of Aekyung Industrial for approximately ₩223.75 billion. This represents a decrease of over ₩11 billion from the original acquisition amount of approximately ₩235 billion.

The total acquisition amount has been reduced from approximately ₩470 billion to approximately ₩447.5 billion, reflecting the adjusted share price. The expected date for stock acquisition has also been moved from February 19th to March 26th.

Recall of 2080 Toothpaste

The revision to the acquisition terms is attributed to Aekyung Industrial’s recent voluntary recall of six varieties of its ‘2080 Toothpaste’. The recall was initiated after trace amounts of triclosan, a preservative banned in oral care products in Korea due to concerns about endocrine disruption and potential links to cancer, were detected. The affected products were manufactured under consignment in China.

The six recalled products are:

• 2080 Basic Toothpaste
• 2080 Daily Care Toothpaste
• 2080 Smart Care Plus Toothpaste
• 2080 Classic Care Toothpaste
• 2080 Triple Effect Alpha Fresh Toothpaste
• 2080 Triple Effect Alpha Strong Toothpaste

Contingent Liabilities and Brand Impact

Industry analysts believe the price adjustment reflects potential contingent liability risks, including costs associated with the recall and potential damage to Aekyung’s brand image. These concerns are particularly relevant given Aekyung’s past controversies, including previous boycotts related to harmful humidifier disinfectants.

Strategic Implications for Taekwang Industrial

Taekwang Industrial initially invested ₩23.5 billion as a down payment in October of the previous year and completed collateral setup. Taekwang Industrial’s strategy is to expand its portfolio from its existing petrochemical focus into the K-beauty and consumer goods sectors, with the acquisition of Aekyung Industrial intended to secure fresh growth engines.

Taekwang Industrial stated that the sale price was adjusted by mutual agreement and the acquisition date was changed, with further updates to be disclosed as they become available.