Hanwha Splits Tech and Life Businesses, Strengthens Kim Dong-gwan's Leadership in Defense, Shipbuilding, and Energy (Comprehensive)

Core Businesses Remain with Surviving Entity
Second Son Kim Dongwon Stays with Financial Affiliates
Third Son Kim Dongseon Moves to the New Entity

Conglomerate Discount Expected to Be Resolved
Strengthening Growth Foundation Around C

With Hanwha's spin-off plan receiving shareholder approval, the third-generation management structure of Hanwha Group is expected to become even clearer. The surviving entity, Hanwha Corporation, led by eldest son Vice Chairman Kim Dongkwan, will focus its capabilities on key businesses such as defense, shipbuilding, energy, and finance, further solidifying the Kim Dongkwan leadership structure. As a result of this spin-off, Vice Chairman Kim Dongkwan (defense, shipbuilding, energy) and second son Kim Dongwon, President of Hanwha Life Insurance, will remain with the surviving entity, while the youngest son, Kim Dongseon, Executive Vice President overseeing the future vision at Hanwha Hotels & Resorts and Hanwha Galleria, will manage the tech and lifestyle businesses, including machinery, semiconductors, equipment, and distribution, at the newly established entity.

Kim Dongkwan, CEO of Hanwha Group, is attending the 'New Year Meeting of the Business Community' held at the Korea Federation of Small and Medium Business in Yeouido, Seoul on October 2, 2024. Photo by Jinhyung Kang aymsdream@

On the 15th, Hanwha Corporation announced that the spin-off plan was approved at an extraordinary general meeting of shareholders with a 99.95% approval rate. This concludes a process that has continued for about six months since the board resolution in January. The spin-off date is set for August 1. The re-listing of the surviving entity and the new entity is scheduled for August 25. The tentative name of the new company is Hanwha Machinery & Services Holdings.

Following the split, defense, shipbuilding & marine, energy, and financial affiliates such as Hanwha Aerospace, Hanwha Ocean, Hanwha Solutions, and Hanwha Life Insurance will remain with the surviving entity. The new entity will incorporate tech affiliates such as Hanwha Vision, Hanwha Momentum, Hanwha Semitec, as well as lifestyle affiliates like Hanwha Galleria, Hanwha Hotels & Resorts, and Ourhome. The split ratio, based on net asset book value, was determined as 0.7563533 for the surviving entity and 0.2436467 for the new entity. Existing shareholders will receive shares in both companies according to this ratio.

The surviving entity is expected to address the so-called "conglomerate discount" through this split. By separating business segments with different growth rates and investment characteristics, each affiliate will be able to formulate market-oriented strategies independently and make prompt decisions. The company anticipates that reduced business heterogeneity, which had been cited as a factor for undervaluation, will lead to a re-evaluation of the surviving entity’s value.

Hanwha Corporation has set a goal of increasing consolidated revenue by about 10% annually from 2025 to 2030. The target return on equity (ROE) for 2030 is 12%. The core driver of growth will be the defense sector. As of the end of last year, Hanwha Aerospace’s ground defense order backlog expanded to approximately 37.2 trillion won. The delivery of K9 self-propelled howitzers and Cheonmu multiple rocket launchers to Poland is now in full swing, converting into recorded sales. Last year, consolidated revenue rose to 26.7029 trillion won, and operating profit reached 3.0893 trillion won, representing year-on-year increases of 137.6% and 78.4%, respectively. In Poland, the company also set up local production bases with the groundbreaking of a missile joint venture plant. Hanwha Ocean is strengthening its efforts to win orders for special-purpose ships and eco-friendly vessels. Maintenance, repair, and overhaul (MRO) of U.S. naval vessels have also emerged as new growth drivers.

This spin-off is expected to provide further momentum for the separation of affiliates among the third generation of Hanwha Group leadership. As Kim Dongkwan’s control over Hanwha Corporation grows, the group's succession structure has become more defined. Vice Chairman Kim Dongkwan will now place all key businesses—defense, shipbuilding, and energy—under the surviving entity. The financial sector, overseen by President Kim Dongwon, will also remain with the surviving entity, positioning the two brothers to jointly lead the group's core businesses. Meanwhile, the role of the youngest son, Executive Vice President Kim Dongseon, has also become more pronounced. He plans to invest 4.7 trillion won by 2030—2.1 trillion won in capital expenditures, 2 trillion won in research and development (R&D), and 600 billion won in mergers and acquisitions (M&A).

At the general meeting, Kim Wooseok, CEO of Hanwha Corporation, stated, "After the split, the surviving company will strengthen a foundation for sustainable growth by focusing on core businesses such as defense, shipbuilding & marine, energy, and finance, while the new company will establish an independent management system centered around security equipment and semiconductor equipment distribution businesses, thereby enhancing specialization and competitiveness in each business segment. By creating a foundation for more clearly assessing the value and growth potential of each business, we will contribute to the long-term corporate value and shareholder value."

This content was produced with the assistance of AI translation services.