Hanwha Energy Launches Tender Offer of 180 Billion Won Worth of Hanwha Corp

• On 5 July, Hanwha Energy announced a tender offer of 8% stake in Hanwha Corporation (000880 KS) worth 180 billion won.

• The tender offer price is 30,000 won. Hanwha Energy will launch a tender offer for up to 6 million shares of Hanwha Corp, representing 8% of outstanding shares.

• Hanwha Corp's 34% stake in Hanwha Aerospace which is worth 4.2 trillion won. (191% of Hanwha Corp's market cap).

Photo by Patrick Campanale on Unsplash

On 5 July, Hanwha Energy announced a tender offer of 8% stake in Hanwha Corporation (000880 KS) worth 180 billion won. This tender offer is aimed at accelerating the succession centered around Hanwha Group Vice Chairman Kim Dong-kwan.

The tender offer price of 30,000 won is at a 12.9% premium to the average of the past month and a 7.7% premium to the previous day's closing price. Current price of Hanwha Corp is 29,050 won. Hanwha Energy will launch a tender offer for up to 6 million shares of Hanwha Corp, representing 8% of outstanding shares. The tender offer period is from 5 July to 24 July.

Hanwha Energy plans to purchase all the shares tendered during the tender offer period, even if the number of tendered shares are lower than the targeted amount. If the tendered shares are more than the targeted amount, the shares will be purchased on a pro-rata basis. If the tender offer is successful, Hanwha Energy's stake in Hanwha Corp will increase from 9.7% to 17.7%.

Hanwha Energy is a private company 100% owned by the three sons of Hanwha Group Chairman Kim Seung-Youn. Vice Chairman Kim Dong-kwan is the largest shareholder of Hanwha Energy with a 50% stake, and President Kim Dong-won and Vice President Kim Dong-seon each owns 25%. Hanwha Group has recently been working on reorganizing its affiliates structure.

A succession structure was established in which Vice Chairman Kim Dong-kwan is in charge of the group's core businesses such as defense, energy, and aerospace. The second son President Kim Dong-won, is in charge of the financial sector, and the youngest, Vice President Kim Dong-seon, is in charge of the distribution/retail/F&B sectors.

Hanwha Energy was established in 2021 by merging with its parent company H-Solution. Hanwha Energy will become the second largest shareholder of Hanwha Corp post tender offer. NH Investment & Securities is the lead banker on this deal.

Major Shareholders of Hanwha Corp

Hanwha Group Chairman Kim Seung-Youn is the largest shareholder of Hanwha Corp with a 22.65% stake. Hanwha Energy is the second largest shareholder with a 9.7% stake. Three sons of Chairman Kim Seung-Youn own a combined 9.2% stake in Hanwha Corp. Foreigners currently own a 13.9% stake in Hanwha Corp, down slightly from 14.4% at the end of 2023.

Conclusion First

In our view, Hanwha Energy has announced a tender offer of 8% shares of Hanwha Corp at 30,000 won since Hanwha Group Chairman Kim and his sons believe that they could increase their shares of Hanwha Corp at dirt cheap prices.