Legal Disputes Rise as Korean Beauty and Fashion Companies Expand M&A Globally

Designer Jean Charles de Castelbajac, known for his eponymous brand, has been embroiled in a series of legal battles since transferring his brand to PMJC in 2012. Castelbajac has consistently filed lawsuits against PMJC, alleging that the company has infringed on his rights by using designs that imitate his works. This ongoing dispute is just one of several high-profile legal conflicts involving major Korean companies and their international acquisitions.

Fashion Group Hyungji, which acquired PMJC in 2016, is currently engaged in a legal battle over the golf wear brand Castelbajac. The designer’s persistent legal actions against PMJC highlight the complexities and challenges that arise when intellectual property rights and brand licensing agreements are contested.

In another significant case, LG Household & Health Care is undergoing arbitration at the International Chamber of Commerce (ICC) regarding the acquisition price of the remaining 35% stake in The Creme Shop.

On August 5, LG Household & Health Care disclosed that Sunna Kim and Insil Kim, shareholders holding 35% of The Creme Shop, have filed a request with the ICC to confirm the validity of exercising a put option for the remaining stake, valued at 178.5 billion won (approximately $132.2 million). This follows LG Household & Health Care’s attempt last year to exercise a call option for the same stake at $66.8 million, which Sunna Kim rejected.

LG Household & Health Care had acquired a 65% stake in The Creme Shop for $120 million in 2022. Since then, The Creme Shop’s sales have surged, growing from approximately 47 billion won in 2021 to 69.9 billion won in 2022, and further to 136.5 billion won last year. The difference in valuation between LG Household & Health Care and Sunna Kim for the remaining stake stands at $63.2 million. An LG Household & Health Care representative stated, “Due to the ‘confidentiality obligations’ under the shareholder agreement, we are not disclosing specific details beyond what has been publicly announced.” The ICC arbitration ruling is expected to be issued in the first half of next year.

Meanwhile, F&F, another prominent Korean company, is involved in a lawsuit worth approximately 370 billion won with the French company Movin SARL. The dispute centers around the Italian sports brand Sergio Tacchini, which F&F acquired in 2022. Movin filed a damages lawsuit in the UK last month, claiming that “STO did not issue the genuine certification license hologram, preventing the sale of clothing.” The lawsuit targets STO, STE, and F&F, with a claim amounting to 245.2 million euros. F&F has described the lawsuit as a “strategic lawsuit to gain an advantage in the dispute.”