This article was displayed on the ChosunBiz MoneyMove (MM) site at 5:01 p.m. on Mar. 5, 2026.
Reports have surfaced that Poongsan will sell its defense institutional sector. Although the defense industry has drawn attention recently and corporate value has surged, interest is growing in why a sale rumor emerged when the defense institutional sector accounts for most of the company's overall operating profit.
Industry sources said rumors of a Poongsan sale have circulated for months. They said the U.S.-national son of Chairperson Ryu Jin faces legal restrictions on running a defense business under current law and has limited interest in succession, leading Ryu to seriously consider selling the defense institutional sector long ago.
Some in the industry also link the latest rumor of Poongsan selling its defense institutional sector to weak results at its U.S. copper production subsidiary. Because passing down the domestic defense business is not easy, some analysts say the company may choose to sell now while valuations are at a peak and use the proceeds to support the U.S. subsidiary.
◇ Son of Chairperson Ryu living in the U.S. has little intention to settle in Korea
According to the investment banking (IB) industry on the 5th, POONGSAN Group has reportedly held behind-the-scenes talks with multiple corporations to sell its defense institutional sector. The sale price is estimated at about 1.5 trillion won, with Hanwha Aerospace and LIG Nex1 mentioned as potential buyers.
Poongsan's market capitalization on the Korea Exchange is currently about 3.3 trillion won. Poongsan Holdings, which owns 38% equity, is the largest shareholder. The largest shareholder of Poongsan Holdings is Chairperson Ryu Jin (37.61%), and the total rises to 48.76% when including equity held by related parties such as the spouse and children. In short, the company has a control structure of "Chairperson Ryu → Poongsan Holdings → Poongsan."
The defense institutional sector is the core business driving Poongsan's overall results. Copper accounts for 70% of revenue and defense for 30%, but the opposite is true for operating profit. Defense accounts for 75%, and copper about 25%. Outwardly it looks like a copper company, but the money is earned by defense.
The rumored sale of Poongsan's defense institutional sector is first being attributed to succession issues. Chairperson Ryu's eldest son, Lois Ryu (Korean name Ryu Sung-gon), obtained U.S. citizenship in 2010 at age 18. Under current law, it is not easy for a foreign national to run or inherit a defense business.
According to Article 6 of the Foreign Investment Promotion Act, if a foreign national acquires shares of an existing defense company to become an executive and exercise de facto control, prior approval from the Minister of Trade, Industry and Resources is mandatory. The Minister must consult with the Defense Acquisition Program Administration. In addition, Article 35 of the Defense Acquisition Act stipulates that approval from the Minister must be obtained when a substantial change in control of a defense company is anticipated.
In addition, to become the CEO or a key executive of a defense contractor, one must undergo a background check by the Defense Counterintelligence Command (formerly the Defense Security Command) and obtain a security clearance, which, in principle, is not granted to foreign nationals.
Ryu is also said to have limited interest in the defense industry. Ryu is currently a vice president at PMX Industries, a U.S. copper institutional sector affiliate.
Some in the industry also say the troubles at PMX Industries may have motivated the sale of the defense business. PMX Industries is a corporation Poongsan established in Iowa in 1989 to reduce U.S. tariff burdens.
PMX Industries, with annual capacity to produce 120,000 tons of copper and copper alloys, was once noted as one of the top three rolled nonferrous product makers in the United States, but it has struggled with chronic losses. During the 2008 global financial crisis, it posted a net loss of more than 100 billion won and fell into capital impairment, and it has failed to escape four consecutive years of net losses from 2022 through last year. Cumulative losses amount to 346.8 billion won.
In response, Poongsan headquarters has increased payment guarantees—collateral for PMX Industries' external borrowings—to 229.3 billion won. In effect, the subsidiary can hardly be sustained without support from headquarters. This is why some expect the proceeds from a defense sale could be used to bolster PMX Industries' competitiveness.
◇ If Hanwha buys it, monopoly risk; little reason for LIG to acquire
However, questions remain about whether the sale will fully get on track and be completed.
The most fundamental issue is that potential buyers are extremely limited. Poongsan is effectively the only company that supplies the main munitions used by the Korean military—from 5.56 mm small-caliber rounds to 155 mm howitzer shells—under an integrated production system (a system in which development and design through manufacturing, inspection and shipment are organically connected). Not only foreign capital but also private equity acquisitions are virtually impossible. There is precedent in which Doosan Mottrol was sold to a private equity firm, but that reflected the special circumstance of Doosan Group's financial distress at the time.
Narrowing the field to domestic corporations, only a few players are seen as capable of handling a deal of this size, such as Hanwha Group, Hyundai Motor Group (Hyundai Rotem) and LIG Group. Because acquiring control of a defense company requires approval from the Minister of Trade and Industry (MOTI), it is difficult for a corporation without an existing defense business to newly enter the sector.
Hanwha already competes directly with Poongsan in the munitions market, so if it seeks to acquire Poongsan's defense business, the government is likely to block it over monopoly concerns. As for LIG Nex1, it already formed and operates a joint venture, "LIG Poongsan Protec," with Poongsan in 2010, so it has little incentive to acquire Poongsan's defense business.
An industry official said, "Selling a defense corporations requires approval from the Ministry of National Defense and the Defense Acquisition Program Administration, so in effect the government determines the buyer's eligibility," adding, "Even if a bidder emerges on the terms Chairperson Ryu wants, the deal's success or failure will be determined by whether the government approves it."