Hanwha will carry out a spin-off that carves out the tech and life institutional sectors to create a new holding company. The move aims to optimize the business portfolio to resolve the conglomerate discount and to strengthen business competitiveness by securing swift decision-making and execution.
It is also noteworthy that most affiliates to be placed under the new holding company fall under the purview of Kim Seung-youn Hanwha Group Chairman's third son, Vice President Kim Dong-Sun of Hanwha Galleria. As Vice Chairman Kim Dong-Kwan, the eldest son, oversees ㈜Hanwha and Vice President Kim Dong-Sun appears to become more independent under him, attention is on the potential impact on the succession structure.
The board of ㈜Hanwha held a meeting on the morning of the 14th and resolved the spin-off. Under the newly established entity "Hanwha Machinery & Services Holdings," tech affiliates such as Hanwha Vision, Hanwha Momentum, Hanwha Semitek, and Hanwha Robotics, and life affiliates such as Hanwha Galleria, Hanwha Hotels & Resorts, and OURHOME will be grouped together. Defense and shipbuilding/marine, energy, and financial affiliates including Hanwha Aerospace, Hanwha Ocean, Hanwha Solutions, and Hanwha Life Insurance will remain under the surviving entity (㈜Hanwha).
Based on net worth book value, the split ratio was calculated as 76.3% for the surviving entity and 23.7% for the new entity. Existing shareholders will receive shares in the surviving and new entities according to the split ratio. The spin-off will go through an extraordinary shareholders meeting in June and other related procedures, with completion slated for July.
◇ Expected to resolve the conglomerate discount and maximize business specialization
㈜Hanwha expects the "conglomerate discount" to be largely resolved through this spin-off. The conglomerate discount refers to a phenomenon in which companies with multiple businesses, such as holding companies, are valued below the sum of the values of their individual institutional sectors split out.
A ㈜Hanwha official said, "If the surviving and new entities are re-evaluated by the market and management efficiency improves, the value of ㈜Hanwha, which has been relatively undervalued, will also rise." In fact, in Sep. 2024, Hanwha Aerospace spun off its non-defense business group into Hanwha Industrial Solutions (now Hanwha Vision), and its market capitalization rose 35% three months later.
Hanwha Machinery & Services Holdings, which will be newly established through this split, plans to boost growth potential through swift decision-making and efficient capital investment. Led by the new holding company, it will execute strategic collaboration and investment between the tech institutional sector and the life institutional sector to nurture "physical AI (AI in physical forms such as robots)" solutions in the F&B and retail domains as next-generation growth engines.
To that end, it has selected three core areas and is crafting strategies for early market capture: ▲ "smart F&B," which leverages AI technology, robots, and automation facilities ▲ "smart hospitality," which applies advanced technology to customer service such as smart control systems ▲ "smart logistics," an intelligent logistics system. The goal is to maximize corporate value not only through the growth of existing businesses but also by pioneering future new businesses that harness synergies between institutional sectors.
The surviving ㈜Hanwha, which gathers defense, shipbuilding/marine, energy, and finance, will also maximize business specialization and strengthen market competitiveness. A ㈜Hanwha official said, "Considering the characteristics of these business groups with high policy sensitivity, we will preemptively respond to various business risks and enhance corporate value by establishing business strategies and investment plans from a long-term perspective."
◇ Third son Kim Dong-Sun to manage independently… affiliate split needs watching
There is talk that Vice President Kim Dong-Sun's role within the group could expand through the new holding company. Among the affiliates placed under the new holding company, most are ones where Vice President Kim serves as an executive or holds equity. At Hanwha Galleria, he is a key shareholder with a 16.85% stake, and at affiliates that disclose business reports such as Hanwha Vision, Hanwha Momentum, Hanwha Galleria, and Hanwha Hotels & Resorts, he serves as executive vice president overseeing future vision.
Vice President Kim Dong-Sun's influence will inevitably be strongly reflected in the new holding company. As the new holding company takes on one of the group's pillars alongside ㈜Hanwha, the structure could further elevate Kim's presence. However, it is said that it has not yet been decided whether Kim will directly serve as the new holding company's CEO.
Some suggest this spin-off is part of an affiliate-splitting process among the three brothers. In Dec. last year, President Kim Dong-Won and Vice President Kim Dong-Sun, who together held 22.15% equity in ㈜Hanwha, sold their stakes in Hanwha Energy, which sits at the top of the group's control structure. This move further strengthened Vice Chairman Kim Dong-Kwan's control over Hanwha Energy.
However, the prevailing view in the industry is that it will be difficult for this spin-off to immediately lead to an affiliate split. Follow-up steps such as equity realignment for the split have not proceeded, and if the group were divided at this point, Hanwha Group's value would inevitably be significantly diluted.
Meanwhile, Han Sang-yoon, Senior Managing Director in charge of IR at ㈜Hanwha, addressed the possibility of a stock exchange among major shareholders at a corporate briefing that day, saying, "This is a simple spin-off, and there are no plans related to equity realignment, equity exchange, or equity sale." On a potential merger between ㈜Hanwha and Hanwha Energy, he said, "We are not considering it at all."
Meanwhile, ㈜Hanwha decided to pursue measures to enhance shareholder value through shareholder return policies such as canceling treasury shares and expanding dividends alongside the spin-off. First, it will cancel 4.45 million common shares, excluding employee performance reward RSUs, after going through procedures such as a shareholders meeting. This is 5.9% of total common shares and is valued at 456.2 billion won (based on the closing price on the 13th), marking the largest treasury share cancellation since the launch of the new administration.
In addition, it set the minimum dividend per share (DPS) at 1,000 won (for common shares), up 25% from last year's payout of 800 won per common share, to provide shareholders with reliability and predictability of dividends.
It will also improve governance. It decided to further strengthen transparent management by ▲ establishing an independent audit support department ▲ preparing and operating a CEO succession policy ▲ announcing the dividend policy and execution plan at least once a year ▲ providing predictability of cash dividends ▲ reviewing website guidance on rights and procedures related to shareholder proposals.