Kumho Petrochemical’s takeover of Kumho resort may no longer be a sure thing as it is facing criticism for potentially buying the resort business at an excessive price.

The firm was named as the preferred buyer for the resort company earlier last month, with the deal expected to be signed at the beginning of this month. However, negotiations have since made little progress, according to sources.

“Kumho Petrochemical had shown strong interest (in Kumho Resort) during the bidding process,” said an industry insider. “But now it is taking a very cautious approach to acquiring the business.”

The sudden shift in the company’s stance could be aimed at lowering the sale price, industry watchers said. Kumho Petrochemical made an offer of around 250 billion won ($226 million), while rival suitors mostly valued Kumho Resort at less than 200 billion won due to the negative impact of Covid-19 on the leisure industry.

Observers note that a dispute over control of Kumho Petrochemical between the owner’s family members is making the situation more complicated. Park Chul-wan, the managing director and chairman Park Chan-koo’s nephew, submitted a shareholder proposal for the annual meeting in March that calls on the board to replace four outside directors whose terms will expire next month.

Park Chul-wan is the largest individual shareholder of Kumho Petrochemical, with a 10% stake. He could probably cite the company’s takeover of Kumho Resort at an expensive price as one of the reasons for a board reshuffle, industry watchers said.

“The board has explained that the takeover was a strategic decision to diversify the company’s business. But it still can be criticized for buying Kumho Resort at too high a price, and Park Chul-wan may use that to persuade shareholders that the board is not functioning effectively,” said another industry insider.

“There is also speculation that Kumho Petrochemical might eventually withdraw from the deal, but we’ll need to wait and see what decision the company makes before its annual meeting.” (Reporting by Byung-yoon Kim)