Hanwha chairman to transfer control to 3 sons

Hanwha Group Chairman Kim Seung-youn waves after giving a speech at Hanwha Aerospace's plant in Changwon, South Gyeongsang Province, May 20, 2024. Courtesy of Hanwha Group By Nam Hyun-woo Hanwha Group Chairman Kim Seung-youn is set to transfer half of his controlling stake in the group’s holding firm, Hanwha Corp., to his three sons, making them the largest collective stakeholder in the conglomerate that spans the defense, construction, energy and finance sectors.

According to Hanwha Corp.’s regulatory filings, Kim will grant half of his 22.65 percent stake in the company, or 11.



32 percent, to his three sons. The eldest son, Hanwha Group Vice Chairman Dong-kwan, will receive 4.86 percent, and the second and third sons, Hanwha Life Insurance President Dong-won and Hanwha Galleria Vice President Dong-seon, will each receive 3.

23 percent. The transaction is set to take place on April 30. Following the transfer, Hanwha Corp.

’s largest shareholder will be Hanwha Energy, with 22.16 percent, followed by Kim with 11.33 percent, his son Dong-kwan with 9.

77 percent and the two other sons who will each hold 5.37 percent. Since Hanwha Energy is fully owned by the three sons, the transfer will raise the sons’ combined stake in Hanwha Corp.

up to 42.67 percent, making them the group's leading stakeholders. Dong-kwan has 50 percent in Hanwha Energy and the two other sons each have 25 percent.

The elder Kim will remain the group’s chairman after the transfer, to provide “strategic advice and support for global business,” Hanwha Group said in a statement. The transfer will incur 221.8 billion won ($150.

7 million) of gift tax, and the group stressed that the owner family will “pay transparently and in good faith.” Read More Watchdog requests revision of Hanwha Aerospace's 3.6 tln-won stock sale plan Hanwha's rights offering draws backlash The transfer comes amid market suspicions that the group has been employing various measures to help the three sons strengthen their control of the group.

Hanwha Aerospace, the group’s defense unit, has been facing shareholder backlash after it decided to issue 3.6 trillion won worth of new shares to finance its overseas investments. Since more shares are set to be traded in the market, the company’s stock price plunged by 13 percent on March 21, the day after the company announced the plan.

Hanwha Corp., the largest stakeholder of Hanwha Aerospace, also suffered a 12 percent drop on March 21 because Hanwha Corp. will purchase Aerospace’s new shares worth 980 billion won.

Hanwha Corp.’s lowered value is an advantage for the three sons’ acquisition of stakes in the holding firm. This combined photo shows the three sons of Hanwha Group Chairman Kim Seung-youn.

From left are Hanwha Group Vice Chairman Dong-kwan, Hanwha Life Insurance President Dong-won and Hanwha Galleria Vice President Dong-seon. Courtesy of Hanwha Group Along with questions on the necessity of the rights issuing, investors expressed anger because Hanwha Aerospace on Feb. 10 spent 1.

3 trillion won to purchase stakes of Hanwha Ocean previously held by Hanwha Energy and its subsidiary, all benefiting the three sons’ potential acquisition of Hanwha Corp. stakes. Due to the controversies, the Financial Supervisory Service last week placed the prospectus of Hanwha Aerospace’s rights issuing on hold , demanding the company clarify the necessity of the measure.

Hanwha Group said the planned rights issuing and transaction of Hanwha Ocean shares are no longer relevant to the group’s ownership succession, as the chairman decided to shoulder the gift tax. “Chairman Kim decided to transfer his shares in order to swiftly clear up unnecessary controversy and misunderstanding surrounding the group’s succession plans, and to refocus attention on the company’s core business,” the group said. “The move is also intended to draw a clear line between the leadership transition and key business activities.

.. The transfer is expected to dispel misunderstandings that Hanwha Corp.

is undervaluing itself for a merger with Hanwha Energy.”.