Hanwha heir to buy W54.4 bil. worth of Hanwha Galleria shares

Hanwha Galleria Vice President Kim Dong-sun, center, poses with CEO Kim Young-hoon, third from left, and other officials of FG Korea, the operator of the burger franchise Five Guys in Korea, at a Five Guys restaurant in southern Seoul, June 26. Courtesy of FG Korea

Kim Dong-sun, the third son of Hanwha Group Chairman Kim Seung-youn and vice president of Hanwha Galleria, will buy 54.4 billion won ($40.6 million) worth of Hanwha Galleria shares in a tender offer to strengthen his control over the commerce unit and buoy the company's bearish share prices.

Hanwha Galleria said Friday that Kim, who heads Hanwha Galleria's future vision department, will purchase 34 million common shares of Hanwha Galleria from Friday to Sept. 11 at 1,600 won per stock.

This tender offer is about 34 percent above the average closing price of Hanwha Galleria shares over the past month, which was 1,190 won, and approximately 23 percent above Thursday’s closing price of 1,303 won.

The 34 million shares represent 17.5 percent of Hanwha Galleria's total common stock. If the offer goes through, Kim will hold a 19.8 percent stake in the company. Hanwha Galleria said Kim will finance the purchase entirely with his personal funds.

According to Hanwha Galleria, Kim made the offer to take responsibility for the company's sluggish performance.

Hanwha Galleria swung to a 4.5 billion won consolidated operating loss in the second quarter of this year, and sales also declined by 0.6 percent to 126.3 billion won during the same period.

Despite the successful launch of the Five Guys burger franchise in Korea, Hanwha's flagship department store business has suffered a significant downturn due to a prolonged economic slowdown. This led to the company's first operating loss since relisting on the KOSPI benchmark in March last year.

Hanwha Galleria stated that a successful tender offer is expected to boost the company's stock price and enhance shareholder value.

"In the wake of this unprecedented crisis, the offer reflects our sense of responsibility and strong commitment to growing the company together with shareholders," Hanwha Galleria CEO Kim Young-hoon said.

The offer allows existing Hanwha Galleria shareholders to sell their shares at a premium above the current market value.

Participation in this offer is entirely voluntary for shareholders, making it more advantageous for retail investors compared to other methods. Additionally, it will decrease the number of shares available on the market, potentially leading to a higher valuation over time.

A company official said, "Based on this tender offer, we will continue to enhance the competitiveness of our existing business and seek new growth drivers across various fields so that we can meet the improved value of our shares."