Hanwha Aerospace seeks to acquire Poongsan munitions biz

Hanwha Aerospace has joined the bid to acquire the munitions business of domestic arms manufacturer Poongsan, signaling a potential expansion into full-scale weapons production.

According to industry sources on Friday, Hanwha Aerospace submitted a final bid in a private tender for Poongsan’s munitions division, which produces a range of ammunition from small-caliber rounds to large artillery shells. The company is widely known for producing 155-millimeter shells used in the K9 self-propelled howitzer, a system exported to several countries, including Poland and Romania.

Industry sources say Hanwha Aerospace appears to be the only serious bidder in the current process. If the acquisition is completed, the company could achieve vertical integration across ammunition production and weapons platform development and export.

However, Hanwha Aerospace declined to comment.

Poongsan has maintained a cautious stance, saying that it is reviewing various options to enhance corporate and shareholder value, including potential restructuring, but that nothing has been finalized.

Poongsan said in a regulatory filing Friday that it is reviewing various measures, including business restructuring, to enhance corporate and shareholder value, but that nothing has been specifically confirmed so far.

Industry observers note that the company’s ambiguous statements have fueled speculation that the move could make it possible for Royce Ryu, the 32-year-old U.S. citizen son of Poongsan Chairman Ryu Jin, to take on management responsibilities without running afoul of Korean laws restricting foreign nationals from leading defense firms.

Analysts say Poongsan’s strong position in the domestic munitions market could attract multiple buyers, particularly defense companies with robust cash reserves.

“Selling the munitions business at a premium during a defense industry boom makes sense from the largest shareholder’s perspective,” said Choi Yong-hyun, an analyst at KB Securities, last month.

In 2022, Poongsan attempted to establish a wholly owned subsidiary dedicated to munitions, fueling earlier speculation about a potential sale. The plan was ultimately scrapped following resistance from minority shareholders concerned about share value decline.