Hanwha Group's acquisition of management rights in Korea Aerospace Industries (KAI) is becoming more tangible. Over the past month, Hanwha invested 500 billion won to increase its stake to over 15% as KAI's stock price experienced significant fluctuations.
According to the Financial Supervisory Service's electronic disclosure system on August 11, Hanwha Systems purchased 3,363,353 shares of KAI from July 8 to August 10 for approximately 499.85 billion won, raising its stake from 1.53% to 4.98%. Prior to this, Hanwha Systems held 1,487,530 shares of KAI.
This stock acquisition coincided with a substantial correction in KAI's stock price, benefiting Hanwha. On July 8, Hanwha Systems' board of directors decided to buy KAI shares up to a limit of 500 billion won by the end of the year. At that time, the board planned to secure 3,121,098 shares based on KAI's closing price of 160,200 won, raising its stake to 4.73%.
During the actual purchase process, shares were acquired at lower prices. According to the disclosure, from July 27 to August 10, Hanwha Systems bought 1,217,053 shares of KAI at an average price of 147,543 won over seven business days. The total purchase amount was about 179.5 billion won. If the initial estimate of 160,200 won per share had been applied, approximately 194.9 billion won would have been needed, resulting in a savings of about 15.4 billion won due to the stock price decline.
As a result, Hanwha Systems is estimated to have secured over 240,000 additional shares than initially expected, achieving a cost-saving effect of around 39 billion won during this period.
A group official stated, "The purchase amount was predetermined, and we executed a large-scale acquisition based on price advantages during the process."
With a 15.89% stake in KAI, Hanwha Group will now enter the corporate merger notification process. Currently, Hanwha Aerospace holds 9.90%, Hanwha Systems 4.98%, and Hanwha Aerospace USA 1.01%, making Hanwha the second-largest shareholder after the Korea Export-Import Bank.
Under current fair trade laws, companies acquiring more than 15% of another listed company's shares must file for corporate merger notification. The notification process must begin within 30 days of surpassing the stake threshold.
Industry analysts believe that the corporate merger review is likely to proceed relatively smoothly, as Hanwha and KAI operate in different areas within the aerospace and defense industry rather than directly competing in the same finished aircraft market. Hanwha focuses on aircraft engines and radar and avionics, while KAI specializes in the development and production of finished aircraft such as the KF-21 and FA-50.
However, the corporate merger review does not immediately imply KAI's integration into Hanwha's group. This procedure follows Hanwha surpassing the 15% threshold for corporate merger notification as the second-largest shareholder. An industry source noted, "For KAI to become part of Hanwha, the company must secure the position of the largest shareholder and undergo another corporate merger review," adding, "As management rights participation becomes clearer, both companies need to consider how they can create synergies together."
* This article has been translated by AI.
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