Hanwha Group has secured a 15.89% stake in Korea Aerospace Industries (KAI), signaling its ambition to become a comprehensive defense company across land, sea, and air. As the second-largest shareholder, Hanwha plans to expand business collaboration with KAI and enhance its competitiveness in the aerospace sector. With its stake exceeding 15%, Hanwha is expected to apply for a merger review with the Fair Trade Commission (FTC).
According to the Financial Supervisory Service's electronic disclosure system on August 10, Hanwha Systems recently acquired 3.45% of KAI shares in the market over the past month. This brings Hanwha Group's total stake in KAI to 15.89%, comprising 9.90% from Hanwha Aerospace, 4.98% from Hanwha Systems, and 1.01% from Hanwha Aerospace USA.
Currently, the largest shareholder of KAI is the Export-Import Bank, which holds a 26.41% stake. With Hanwha acquiring more than 15% of KAI's publicly traded shares, it is required to file for a merger review with the FTC.
Hanwha's strategy with this stake increase is to secure sovereignty in space and enhance its export competitiveness in the aerospace and defense sectors.
Hanwha possesses technological and manufacturing capabilities in areas such as aircraft engines, guided weapons, radar, satellites, and land and maritime defense, while KAI has comprehensive system capabilities for fighter jets, helicopters, and drones. Industry observers believe that collaboration between the two companies could establish a comprehensive aerospace and defense system covering land, sea, and air.
In fact, Hanwha has unveiled a long-term strategy to invest 55 trillion won by 2040 to become an 'AI space power.' This includes developing independent launch vehicles and satellites, as well as establishing space AI data centers, low-orbit communication networks, and defense AI data centers to secure infrastructure that encompasses both space and defense.
Kim Dong-kwan, Vice Chairman of Hanwha Group, stated at the recent 'AI Space Power' strategy announcement in Jinju, Gyeongnam, "South Korea should no longer view space and aviation as separate industries. When space and aviation, AI and defense are interconnected, we can truly leap forward as an AI space power."
With Hanwha acquiring more than 15% of KAI's shares, it has triggered the FTC's merger review process. Under the Fair Trade Act, acquiring more than 15% of a publicly traded company's shares necessitates a merger notification. If the FTC finds that Hanwha's market dominance increases significantly after acquiring KAI shares, potentially limiting market competition, Hanwha may need to reduce its stake to below 15%.
However, industry experts believe that since Hanwha is not the largest shareholder of KAI and the businesses of the two companies do not overlap, the likelihood of the FTC intervening is low.
* This article has been translated by AI.
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