Hyundai Rotem has decided to acquire the defense business division of Hyundai Wia, a subsidiary of Hyundai Motor Group, marking a move towards vertical integration in ground weapon production. This acquisition comes as the defense sector has faced sluggish performance, providing a foundation for a turnaround by consolidating key armament production operations. Changes in the competitive landscape with Hanwha Aerospace in the ground weapons sector are also anticipated.
On October 19, Hyundai Rotem announced it will acquire Hyundai Wia's special business division for 358.386 billion won. This amount excludes 117 billion won for land and buildings subject to lease from the division's operational value of 480 billion won.
Both companies held a board meeting on the same day and approved the transfer of all business assets and liabilities of the special business division. All 200 employees of the division will be retained. The production facility located in Seongsan-gu, Changwon, will remain under Hyundai Wia's ownership, with Hyundai Rotem operating it under a lease agreement. Hyundai Wia plans to hold an extraordinary shareholders' meeting on November 27 to vote on the business transfer.
The motivation behind Hyundai Rotem's acquisition of Hyundai Wia is to secure competitiveness through the consolidation of its ground weapon business. By integrating the previously separate tank and artillery production capabilities, the company expects to enhance efficiency in parts procurement and production processes, as well as achieve cost savings. Utilizing Hyundai Wia's large-caliber artillery, remote firing control systems, and anti-drone defense technologies could also allow Hyundai Rotem to expand its defense business beyond tanks to a variety of ground weapon systems.
This acquisition is particularly significant as Hyundai Rotem seeks to establish a new breakthrough in the defense industry. The company reported consolidated revenues of 1.6207 trillion won and an operating profit of 247.1 billion won for the third quarter of this year. While revenues increased by 0.1% compared to the same period last year, operating profit fell by 11%.
In the defense, robotics, and hydrogen sectors, third-quarter revenues and operating profits were 841.2 billion won and 236 billion won, respectively, down 10.1% and 10.5% year-on-year. The order amount for these sectors was only 344.5 billion won. This drop in revenue is attributed to a gap during the transition from the first to the second phase of the K2 tank contract with Poland. Hyundai Rotem is accelerating vertical integration as it aims to expand K2 tank exports to countries such as Peru, Romania, and Iraq.
Industry experts believe this acquisition will enhance Hyundai Rotem's competitiveness against Hanwha Aerospace in the ground weapons sector. Hyundai Rotem competes globally with its K2 tanks and K806 and K808 wheeled armored vehicles, while Hanwha Aerospace offers the K9 self-propelled howitzer and AS21 Redback. In July, Hanwha Aerospace was selected as the final contractor for the Army's multipurpose unmanned vehicle project.
Choi Gi-il, a professor at Sangji University, stated, "With this acquisition decision, Hyundai Rotem has completed its integration and secured competitiveness in the global market. Competition will intensify between Hyundai Rotem's K806 and K808 wheeled armored vehicles and Hanwha Aerospace's Redback business line."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.