Hanwha accelerates three-way split among chairman's sons
Hanwha Group Chairman Kim Seung-youn, third from left, poses with his three sons, during a ceremony for the 100th anniversary of the birth of his late father and Hanwha Group founder Kim Chong-hee, at 63 Convention Center in Seoul in this November 2022 file photo. From left are Hanwha Galleria Vice President Kim Dong-seon, Hanwha Life Insurance President Kim Dong-won, the chairman and Hanwha Group Vice Chairman Kim Dong-kwan. Courtesy of Hanwha Group
Hanwha Group took additional steps recently for the chairman’s oldest son to inherit the group’s core units of defense and energy subsidiaries, while tasking the second-oldest with managing financial affiliates and the youngest with leading the retail, construction, robotics and machinery businesses, according to industry officials, Sunday.
The conglomerate decided Friday to spin off Hanwha Vision and Hanwha Precision Machinery from Hanwha Aerospace by September. It also plans to establish a new holding firm named Hanwha Industrial Solutions, which will supervise the video surveillance and semiconductor equipment units, after their spin-offs from the defense and aerospace affiliate.
Hanwha explained that their planned spin-offs are intended to streamline the management and enhance the group’s competitiveness in the arms industry.
However, securities analysts interpreted the decision as preparatory measures for Hanwha Galleria Vice President Kim Dong-seon, the chairman’s youngest son, to inherit the group’s non-core affiliates, which have been under control of his oldest brother, Hanwha Group Vice Chairman Kim Dong-kwan.
“Considering the current situation, the vice chairman is expected to lead Hanwha Aerospace, while the vice president will manage the spun-off companies,” Shinhan Securities analyst Lee Dong-heon said.
The decision came two days after Hanwha Corp. announced its planned restructuring of affiliates. The group’s de facto holding company said its affiliates will concentrate more on each of their core businesses after the restructuring.
However, the plan has been also considered to be intended for the chairman’s oldest son to take control of the offshore wind power, plant and solar power equipment businesses and the youngest to manage the construction unit and the equipment business irrelevant to photovoltaics.
“These restructuring measures are aimed at improving the overall governance structure of Hanwha Group, as it prepares to transfer the management to the three sons of Chairman Kim Seung-youn,” said Douglas Kim, an analyst at Smartkarma, a Singapore-based investment research firm.
Hanwha Group Chairman Kim Seung-youn, center, takes a selfie with his youngest son, Hanwha Galleria Vice President Kim Dong-seon, front row left, and Hanwha Robotics employees at the robotics firm's headquarters in Seongnam, Gyeonggi Province, Friday. Courtesy of Hanwha Group
Over the past couple of years, Hanwha has made apparent efforts to prevent the chairman’s youngest son from being isolated from the managerial succession, as his two older brothers have already tightened their grips on the group’s core units and financial affiliates, respectively.
The youngest, who left Hanwha in 2017 over the allegation that he had assaulted law firm Kim & Chang’s new recruits during a binge-drinking session at a bar in Seoul, returned to the group in late 2020.
After his return, Hanwha gave him several important positions at the group’s hotel, leisure and retail subsidiaries, as well as its construction unit. In addition, the conglomerate tasked him with devising strategies for Hanwha Robotics, citing the potential use of robots at hotels and restaurants.
His father also showed his support for him on Friday by visiting the robotics firm’s headquarters and eating Five Guys hamburgers with the company’s employees in their 20s and 30s. The chairman’s youngest son especially drew attention last year, when Hanwha Galleria won the license to run the U.S. hamburger chain in Korea.