With Hyundai Rotem’s acquisition of Hyundai Wia’s defense division, Hyundai Motor Group’s defense business has been consolidated under Hyundai Rotem. Hyundai Rotem announced on the 19th that it will complete the acquisition of Hyundai Wia’s Special Business Division, which produces tank and self-propelled howitzer barrels, by the end of March next year for KRW 358.386 billion.

The transaction involving the defense business units of the two companies is based on Hyundai Motor Group’s group-wide “selection and concentration” strategy. Hyundai Rotem aims to build a vertically integrated structure in the defense sector, while Hyundai Wia intends to focus its business capabilities on future mobility.

Hyundai Rotem, which is acquiring the Special Business Division, stated, “By vertically integrating the defense business, the company will secure price competitiveness and expand localized items for export volumes to strengthen global competitiveness.” Hyundai Rotem developed the K1 tank in the 1970s and still retains the capability to manufacture tanks, being the only such producer in Korea.

Given that the Hyundai Wia Special Business Division to be acquired has supplied most barrels for land and naval weapons to both group affiliates and competitors, market expectations are that Hyundai Rotem’s leadership in the defense business will be further reinforced. Hyundai Rotem added that it has sufficient funds for the acquisition of Hyundai Wia thanks to the recent boom in defense exports.

Hyundai Wia, which is selling the Special Business Division, explained, “The decision to transfer the Special Business Division was made to respond to the rapidly changing mobility market.” The Special Business Division accounted for about 5% of Hyundai Wia’s total sales, a relatively small share. By divesting this division and focusing on mobility businesses such as vehicle air-conditioning systems and battery thermal management systems, as well as robotics businesses including parking robots, the company plans to raise its sales from the current KRW 8.8 trillion to around KRW 14.8 trillion by 2035.

The reason the two companies have separately operated defense businesses within the same group until now lies in their different origins. Hyundai Rotem started in Hyundai Heavy Industries’ rolling stock division, was spun off as Hyundai Rolling Stock, and in 1985 was merged into Hyundai Precision, continuing its business within the broader Hyundai Group.

By contrast, Hyundai Wia traces its roots back to Samwon Industrial, a subsidiary of Kia Industry established in 1976. It primarily produced 105mm and 155mm towed howitzers and has also manufactured barrels for the K2 tank and K9 self-propelled howitzer.

Hyundai Wia plans to convene an extraordinary general meeting of shareholders on the 27th of next month to approve the division sale agenda. As Hyundai Motor, Kia, and Hyundai Motor Group Chairman Chung Euisun collectively hold a 40.74% stake, the company expects no unexpected developments at the shareholders’ meeting. Hyundai Rotem completed its board resolution on the day of the disclosure.

On the day of the announcement, the share prices of both companies rose in tandem. On the Korea Exchange’s KOSPI market, Hyundai Wia shares closed at KRW 52,000, up 6.89% from the previous day, while Hyundai Rotem shares ended at KRW 100,500, a rise of 3.72%.

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