Hanwha Aerospace conducts spinoff to focus on defense industry

Hanwha Aerospace, the defense arm of South Korea’s seventh-largest conglomerate Hanwha Group, said Friday it will segregate its non-military businesses into a newly established corporation, aiming to focus on its defense business operations.

According to Hanwha Aerospace’s announcement Friday, Hanwha Aerospace will spin off a new entity, tentatively named Hanwha Industrial Solutions. This new corporation will take over Hanwha Vision, specializing in artificial intelligence solutions, and Hanwha Precision Machinery, focusing on semiconductor equipment -- both of which were previously part of Hanwha Aerospace.

Hanwha Group, the parent company, will retain a 33.95 percent stake in both Hanwha Aerospace and the newly formed corporation.

The decision to separate the businesses was made to address shortcomings in terms of fast, professional decision-making due to differences in business strategies between defense businesses and other sectors, as explained by the group.

Hanwha Aerospace was established in 2015 following the acquisition of Samsung Techwin, which specialized in aviation and defense operations, surveillance cameras and energy and industrial equipment.

In May 2023, Hanwha Aerospace completed the integration of defense business units formerly under Hanwha Group by acquiring Hanwha Ocean, specializing in building military vessels and offshore plants. Hanwha Defense and the remaining military business unit under Hanwha Group were incorporated into Hanwha Aerospace in November 2022 and April 2023, respectively.

Following the business restructuring, Hanwha Aerospace has focused on space, aviation, and military businesses, while operating the remaining businesses individually according to their business categories. For example, the energy business department was transferred to Hanwha Impact, specializing in hydrogen combustion.

With the decision, Hanwha Systems and Hanwha Ocean will remain under Hanwha Aerospace.

"Alongside the restructuring of our business structure, Hanwha Aerospace aims to optimize management efficiency,” Hanwha Aerospace said in a press release. “We will continuously strive to become a global comprehensive military solutions company that encompasses ground, maritime and space domains through a business portfolio centered around military operations.”

The spinoff ratio between Hanwha Aerospace and Hanwha Industrial Solutions is set at 9-to-1, meaning 9 out of 10 stakes will remain with Hanwha Aerospace, and the remaining 1 will be in the new corporation. The spinoff is expected to be finalized around September.