Dong-A Pharmaceutical’s controversial plan to put its cash cow energy drink business Bacchus under an unlisted firm wholly owned by a new holding company passed the shareholders’ meeting on Monday.

Present shareholders of 73 percent of the firm’s stake approved Dong-A’s plan to split itself into two business corporations that make prescription drugs (Dong-A ST) and over-the-counter drugs (Dong-A Pharm), and set up a holding company (Dong-A Socio Holdings) that holds a 100 percent stake in Dong-A Pharm, the nation’s largest drugmaker said.

Dong-A’s plan to issue new shares in bulk to help its largest shareholder strengthen control over the holding company, however, fell through.

The National Pension Fund, which holds a 9.5 percent stake in Dong-A, and a group of minority shareholders disapproved of the split-up plan, fearing it would only tighten the chairman family’s grip over the group’s top assets and undermine shareholder value. The vote came after heavy media attention on the company’s governance.

Stakeholders of over 10 million shares attended the meeting on Monday, where 17 percent (owners of 1.77 million shares) including the National Pension Fund voted against the plan and 9 percent abstained.

Major shareholders such as GlaxoSmithKline (9.91 percent stake), Otsuka (7.9 percent), the employee stock ownership association (6.7 percent), foreign investors (5.4 percent) and Green Cross (4.2 percent) backed Dong-A chairman Kang Shin-ho (14 percent).

By Kim So-hyun (sophie@heraldcorp.com)