Hanwha gains Samsung defense arms

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Hanwha gains Samsung defense arms

The government on Friday approved a deal that will see Samsung Group sell its two defense affiliates to Hanwha Corporation.

The Ministry of Trade, Industry and Energy announced that it had approved the request by Hanwha Group to acquire Samsung’s two defense arms, Samsung Techwin and Samsung Thales.

Because the sale of a defense company relates to national security, the deal had to be approved by the Industry Ministry.

Hanwha submitted its request in December.

The government approved the arrangement on Friday.

Hanwha’s successful merger and acquisition of the two defense businesses would move the conglomerate into the No. 1 spot in the defense industry, boosting its total revenues from 1 trillion won ($917 million) to about 2.6 trillion won.

Hanwha’s purchase of the two affiliates is part of a package deal made in November last year that would see the corporation also take over Samsung General Chemicals and Samsung Total Petrochemicals.

Samsung at the time estimated that the sales, which are expected to be finalized in the first half of this year, would total 1.9 trillion won.

The ministry said it approved the deal because the acquisition is a management takeover by stock trades, which would not significantly affect either corporation’s future business dealings.

The Defense Acquisition Program Administration also told the ministry on Jan. 29 that it had assessed there would not be any foreseeable issues.

“We judged that the merger and acquisition is only an ownership transfer from Samsung to Hanwha,” the Industry Ministry said in a statement.

“We were not able to find any defects in the companies’ production facilities, production capabilities, number of employees and financial statements. We also compared the deal with previous cases and found no problems,” it added.

In December, Hanwha issued a press release to clear rumors that workers at the four Samsung affiliates would have their salaries cut or face layoffs. It further stressed that it would try not to reduce employees’ welfare benefits and maintain the initial values of the businesses following the merger.

The ministry said management ownership would be handed over to Hanwha after the company purchased Samsung shares.

The next step is the evaluation process, during which the Fair Trade Commission will determine how the deal will influence competition in industries related to defense.

According to analysts, there is the possibility that Hanwha’s domestic market share in the chemical business could exceed 50 percent if it acquires Samsung General Chemicals and Samsung Petrochemicals.

A successful merger and acquisition could see Hanwha Group move up a spot to become the nation’s ninth-largest conglomerate in terms of total assets.

BY KWON SANG-SOO [sakwon80@joongang.co.kr]

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