Hyundai Rotem said Monday it had signed an agreement to acquire Hyundai Wia's special business division, which manufactures main guns for K2 tanks and gun barrels for K9 self-propelled howitzers.
The division also develops naval guns, remote-controlled weapon systems (RCWS), close-in weapon systems (CIWS) and counter-drone technologies.
The acquisition will allow Hyundai Rotem, which manufactures the K2 tank, to bring key weapons production in-house rather than relying on an external supplier.
The company expects the move to reduce production costs, improve supply chain stability and strengthen its ability to meet localization requirements in overseas defense contracts.
The deal is expected to be completed by the end of March 2027, following a Hyundai Wia shareholder meeting scheduled for Nov. 27. Hyundai Rotem will take over the division's assets, liabilities, employees and intellectual property, retaining all existing workers.
The business recorded 393.1 billion won in revenue and 45.6 billion won in operating profit last year.
Brokerage analysts welcomed the acquisition Tuesday, saying it could improve Hyundai Rotem's cost competitiveness while expanding its business beyond armored vehicles.
KB Securities analyst Jung Dong-ik said the deal could generate savings through vertical integration, improve research and development efficiency and diversify Hyundai Rotem's operations.
Analysts also pointed to opportunities in counter-drone systems, naval weapons and remote-controlled defense technologies.
However, they cautioned that the acquisition alone would not resolve concerns over Hyundai Rotem's earnings and delays in securing new overseas contracts.
The company's third-quarter revenue and operating profit fell about 10 percent short of market expectations, while uncertainty over additional defense exports beyond Poland has weighed on its outlook.
Several brokerages, including Samsung Securities, Shinhan Securities and Kiwoom Securities, subsequently lowered their target prices for Hyundai Rotem shares.
Hyundai Rotem plunged 11.9 percent as of 12:05 pm Tuesday to 88,800 won, after trading between an intraday high of 101,700 won and a low of 86,500 won.
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