Hanwha Group has begun separating businesses among Chairman Kim Seung-youn's three sons through a corporate split of its holding company Hanwha Corp.
The group will keep its core defense, shipbuilding, chemicals and financial businesses under the holding company while spinning off the tech, hotel and retail divisions led by Vice President Kim Dong-sun, the chairman's third son, into a new entity.
Hanwha Corp. (000880.KS) announced Wednesday that its board approved a demerger creating two entities: a surviving company focused on defense, shipbuilding, energy and financial services, and a new company overseeing tech and lifestyle businesses.
The new entity, to be named Hanwha Machinery & Service Holdings, will include tech subsidiaries such as Hanwha Vision, Semitec and Robotics, along with Hanwha Galleria, Hotels and Ourhome. The surviving Hanwha Corp. will retain flagship companies including Hanwha Aerospace (012450.KS), Ocean (042660.KS), Solutions and Life Insurance (088350.KS). The split is scheduled for completion by July following an extraordinary shareholders' meeting in June.
Hanwha Group cited eliminating the "conglomerate discount" as the rationale for the split. However, investment circles interpret the move as a signal that succession centered on Vice Chairman Kim Dong-kwan, the chairman's eldest son, is now proceeding in earnest.
"This reads as a signal that by first spinning off the tech and lifestyle divisions led by Vice President Kim Dong-sun, the third son, the succession process centered on Vice Chairman Kim Dong-kwan will proceed without disruption," an industry source said.
Hanwha Corp. also announced a share buyback cancellation worth approximately 570 billion won ($420 million), sending its shares surging 25.4% on the KOSPI to a 52-week high. Hanwha Life Insurance rose 10.4%, while Hanwha Galleria hit the daily limit.
