After the transfer, the three sons will collectively control 42.67% of Hanwha Corp. when combined with indirect holdings via Hanwha Energy Corp., a company they wholly own.
Of Chairman Kim’s 11.32% holdings, 4.86% will be handed over to the first son, and the remaining stake will be equally split between the younger two sons.
Following the stake handover, Chairman Kim’s holdings in Hanwha Corp. will drop to 11.32%, while the first son's stake will rise to 9.77%, and the younger two sons' holdings to 5.37%, respectively.
THREE SONS' TIGHTER GRIP
(Graphics by Dongbeom Yun) The first son, Kim Dong-kwan, also the chief executive officer of Hanwha Solutions Corp., Hanwha Aerospace Co. and Hanwha Corp., holds a 50.0% stake in Hanwha Energy, and his two younger brothers equally share the remaining.
Considering that Hanwha Energy controls a 22.16% stake in Hanwha Corp., the first son will wield the largest 20.85% voting power in Hanwha Corp.
With Chairman Kim’s handover of his stakes in Hanwha Corp. to his sons, Korea’s seventh-largest family-controlled conglomerate’s leadership shift to its third generation has nearly been completed, said an unnamed official from the group.
His two younger brothers, Kim Dong-won and Kim Dong-seon, are also expected to wield greater power over the group’s two other flagship businesses, financial and retail, respectively.
Hanwha Group's headquarters building Chairman Kim will maintain his group chairmanship after the stake change to support a seamless power transition to his three sons by remaining in a management advisory role, according to the company official.
NO MERGER BETWEEN HANWHA AND HANWHA ENERGY
This succession move comes amid growing criticism surrounding a recent rights issue plan by Hanwha Aerospace, one of the group’s key subsidiaries and Korea’s leading defense company.
Hanwha Aerospace’s 3.6 trillion won ($2.7 billion) new share sale plan, announced late last month, has faced a backlash as it came about a week after the company spent 1.3 trillion won, or 94.5% of its cash and cash equivalent assets, to buy a 7.3% stake in Hanwha Ocean Co. from Hanwha Impact Co. and Hanwha Energy.
Hanwha Aerospace shareholders criticized the group for taking advantage of the defense company’s fat cash coffer to avoid hefty inheritance taxes during the leadership transition in the owner family.
Hanwha Group denied the accusation, saying that Hanwha Aerospace has acquired an additional stake in Hanwha Ocean to aid the shipbuilding unit’s business expansion in overseas markets.
US Pacific Fleet Commander Admiral Stephen Koehler (front, center) and Hanwha Group Vice Chairman Kim Dong-kwan (front, right) visit Hanwha Ocean’s shipyard to inspect the USNS Wally Schirra on Oct. 24, 2024 On Monday, Hanwha Aerospace announced an 11 trillion won investment plan, of which 3.6 trillion won will be funded via the rights offering and the remaining with cash and financial loans.
It will invest mainly in its deeper penetration into the defense market in Europe and the Middle East, the company said.
An official from Hanwha Group said Chairman Kim has decided to transfer his stakes in Hanwha Corp. to his sons as part of efforts to silence speculation about manipulating corporate valuations for the group’s leadership transition to his sons.
Following the Hanwha stake transfer announcement, the group’s unnamed official said the group has no plan to merge Hanwha Corp. and Hanwha Energy, which was expected as a less expensive way to bump up the family-owned group’s third-generation shares in the de facto holding firm.
Considering the electricity retail and solar energy company’s share ownership in Hanwha Corp., its IPO was seen as a prelude to a merger between the two companies.
Write to Woo-Sub Kim, Jin-Won Kim and Hyung-Kyu Kim at duter@hankyung.com Sookyung Seo edited this article.
