Hanwha to separate tech, lifestyle businesses

(Hanwha)

Hanwha Corp., the holding company of South Korea’s Hanwha Group, will carry out a spin-off to separate its tech and lifestyle businesses.

According to Hanwha on Wednesday, its board of directors approved the spin-off plan during a meeting on the same day.

The process is expected to be completed in July, following subsequent procedures including an extraordinary shareholders’ meeting in June.

Once the spin-off is completed, tech-sector affiliates including Hanwha Vision Co., Hanwha Momentum Co., Hanwha Semitech Co., and Hanwha Robotics Co., along with lifestyle-sector affiliates such as Hanwha Galleria Corp., Hanwha Hotels & Resorts Co., and Ourhome Ltd., will be placed under the newly established entity, Hanwha Machinery & Service Holdings.

Hanwha Aerospace Co., Hanwha Ocean Co., Hanwha Systems Co., Hanwha Solutions Corp., Hanwha Life Insurance Co., Hanwha General Insurance Co., and Hanwha Investment & Securities Co., on the other hand, will remain with the surviving company.

The defense, shipbuilding, and energy businesses overseen by Vice Chairman Kim Dong-kwan, the eldest son of Chairman Kim Seung-youn, as well as the financial businesses led by President Kim Dong-won, the second son, will continue under the surviving entity.

Only the tech and lifestyle business groups overseen by Vice President Kim Dong-seon, the youngest son, will be spun off into the new holding company.

Hanwha explained that the latest spin-off is intended to establish management strategies tailored to the characteristics of each business group and to build a system that enables swift decision-making.

“This spin-off will strengthen stability for our business groups where long-term growth strategies and investment plans are crucial, such as defense, shipbuilding and marine, energy, and finance, while the machinery and service business groups will be able to pursue flexible and agile growth strategies to better respond to market demands,” said a Hanwha official.

The spin-off ratio was set at 76.3 percent for the surviving entity and 23.7 percent for the newly established company, based on the book value of net assets.

Existing shareholders will receive shares in both entities in proportion to the split ratio.

Following the announcement of the spin-off plan, Hanwha shares surged 25.37 percent from the previous day to close at 128,500 won ($87.88).

The stock even surpassed 130,000 won during intraday trading, setting a new 52-week high.

The rally is attributed to the company’s decision to cancel its treasury shares, which was announced alongside the spin-off, as well as positive investor sentiment fueled by Hanwha Aerospace’s past spin-off, after which its share price rose 35 percent over three months.

Shares of Hanwha Galleria also hit the daily upper limit with a 29.97 percent gain, while those of Hanwha Life Insurance and Hanwha General Insurance climbed 10.44 percent and 4.21 percent, respectively.

Market analysts assessed that expectations of accelerated affiliate separations following the spin-off helped drive the rally in related stocks.