Hanwha Group will spin off Hanwha Corporation through a vertical split to establish an independent management system for each business. The company will be divided into a surviving entity that holds existing core businesses such as defense, shipbuilding and offshore, energy, and finance, and a new entity responsible for the tech and life divisions. The group will also proceed with the retirement of treasury shares worth approximately KRW 400 billion in parallel, expanding its shareholder return policy.

According to the investment banking (IB) industry on the 14th, Hanwha Corporation held a board of directors meeting that day and resolved the vertical split. The split ratio is 76% for the surviving entity and 24% for the new entity. The company plans to complete the split procedures in July after an extraordinary general meeting of shareholders in June.

Hanwha Corporation is reported to have decided on the vertical split to establish a decision-making structure aligned with the characteristics and strategies of each business division. After the split, the company plans to strengthen independent and accountable management by division.
The surviving entity will retain existing core affiliates such as Hanwha Aerospace (defense), Hanwha Solutions (energy), and Hanwha Life Insurance (finance). Hanwha Systems (aerospace), in which Hanwha Aerospace is a major shareholder, and Hanwha Ocean (shipbuilding and offshore) will also be incorporated under the surviving entity.

The new entity will oversee tech affiliates such as Hanwha Vision (video security), Hanwha Momentum (logistics automation equipment), Hanwha Semitec (advanced manufacturing equipment), and Hanwha Robotics (robots), as well as life division affiliates such as Hanwha Hotels & Resorts (hotels, resorts, leisure, food service), Hanwha Galleria (department stores, food and beverage), and Ourhome (contract foodservice, food materials distribution).

An IB industry source said, “As Hanwha Corporation has been engaged in multiple businesses simultaneously, it is possible that decision-making has been relatively focused on existing industries with larger scale,” adding, “It appears that the company chose a vertical split to enable swift decision-making tailored to each business characteristic.” The source continued, “The new entity is also expected to pursue the development of new businesses through synergies between the tech and life divisions.”

Meanwhile, at this board meeting Hanwha Corporation also resolved to retire treasury shares equivalent to about 5% of its shares, worth approximately KRW 400 billion. The company also plans to acquire and retire all remaining legacy preferred shares through off-exchange purchases. An increase in dividends is under review. These measures are seen as fulfilling the minority shareholder protection plan promised at the time of last year’s preferred share delisting and as efforts to enhance shareholder trust.

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