Hanwha moves to expedite accession of chairman's three sons

Industry

Hanwha moves to expedite accession of chairman's three sons

Published: 03 Sep. 2024, 16:48 Updated: 03 Sep. 2024, 18:49

Hanwha Industrial Solutions CEO Ahn Soon-hong, second from right, and other executives pose for a group photo at the company’s inaugural general meeting on Monday. [HANWHA GROUP]

Hanwha Group, one of Korea's largest business conglomerates, is carrying out equity spinoffs and share acquisitions to expedite succession planning for the three sons of chairman Kim Seung-youn.

The group on Monday officially launched Hanwha Industrial Solutions after announcing a spinoff from Hanwha Aerospace in April. The new unit will be involved in the security, chip mounter and chip equipment businesses.

This move is seen as a strategic step to divide the conglomerate's businesses among the three sons of the incumbent chairman. As potential successors, his eldest son, Kim Dong-kwan, will oversee renewable energy, space and defense; second eldest Kim Dong-won will focus on finance; and the youngest of the three, Kim Dong-seon, will lead the leisure, construction and machinery businesses.

The Kim family is also actively acquiring shares to strengthen their control over their businesses. The youngest Kim launched a tender offer in August for Hanwha Galleria, a department store chain, to purchase 34 million shares. As the company's vice president, Kim's purchase has driven up the share price by 20 percent to 1,600 won ($1.20) since the announcement. If successful, this acquisition will increase his stake to 19.86 percent from the current 2.32, signaling a strong commitment to consolidating his power.

From left are Hanwha Group Chairman Kim Seung-youn's eldest son Kim Dong-kwan, second eldest Kim Dong-won and youngest Kim Dong-seon. [HANWHA GROUP]

Unlisted Hanwha Energy, owned by the three Kim brothers, recently acquired a 5.2 percent stake in its de facto holding company, Hanwha Corporation. This brings their total ownership to 14.9 percent, second only to the group's sitting chairman, who holds 22.65 percent. When combined with the existing 9.74 percent owned by the brothers, the total stake of the owning family now stands at 47.29 percent, nearly half of the company's total shares.

A top priority for the Kim family is to secure funds to cover the inheritance tax that will become due when they officially transfer ownership of Hanwha Group.

Some experts have speculated about the possibility of an initial public offering for Hanwha Energy or a merger between Hanwha Energy and Hanwha Corporation as potential strategies to raise the necessary funds.

The appointment of the eldest Kim as the new head of the investment division at Hanwha Impact is seen as a strategic move to increase the value of Hanwha Energy, which is currently struggling under the financial burden of investments in new energy and share purchases of its affiliates.

If the eldest Kim can successfully improve Hanwha Impact's financial performance, Hanwha Energy's performance is likely to follow suit, enabling the three Kim brothers to reap greater profits.

BY CHOI HYEON-JOO [yoon.seungjin@joongang.co.kr]