The Korea Fair Trade Commission (KFTC) has approved Hanwha Group's acquisition of a stake in Korea Aerospace Industries (KAI). The KFTC determined that Hanwha's current ownership level does not provide sufficient influence over KAI's management to raise concerns about limiting market competition.
On August 31, the KFTC announced its decision regarding the acquisition of KAI shares by three Hanwha affiliates, including Hanwha Aerospace.
Hanwha has secured a total of 15.89% of KAI's shares, with ownership distributed as follows: Hanwha Aerospace holds 9.90%, Hanwha Systems 4.98%, and Hanwha Aerospace USA 1.01%. Hanwha reported the acquisition of over 15% of KAI's shares to the KFTC as part of a corporate merger notification.
Under the Fair Trade Act, a general review of corporate mergers applies when independent companies consolidate under a single controlling entity. If acquiring shares does not establish a controlling relationship, it is presumed to not restrict competition and is excluded from the general review.
The KFTC concluded that Hanwha's share acquisition alone does not grant it control over KAI. Currently, the largest shareholder of KAI is the Export-Import Bank of Korea, which holds 26.41% of the shares. The National Pension Service also owns 8.75%, bringing the total government ownership to 35.16%.
As a result, even if Hanwha becomes the second-largest shareholder of KAI, the existing share structure makes it difficult for Hanwha to exert substantial influence over KAI's overall management, according to the KFTC.
However, the KFTC warned that if Hanwha acquires additional shares to become the largest shareholder or if it appoints one-third of KAI's executives or the CEO, it will trigger a new corporate merger notification obligation under the Fair Trade Act. In such a case, a merger review will be conducted again.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.