[M&A로 쓴 Hanwha 70 Years History]②The True Colors of Chairman Kim Seung-yeon's Gambler Spirit

Leading the Group for Over 40 Years, Increasing Sales by More Than 60 Times
Acquired Hanyang Chemical and Korea Dow Chemical During the Oil Crisis
Decisive M&A to Expand Distribution and Financial Business Areas

Editor's NoteOn October 9th, Hanwha Group, celebrating its 70th anniversary, is preparing for a new leap forward through relentless innovation and proactive mergers and acquisitions (M&A). Starting from explosives, Hanwha Group has built its core growth engines in chemicals, distribution, finance, solar energy, defense, and aerospace. Recently, with the pursuit of acquiring Daewoo Shipbuilding & Marine Engineering, the group's standing in the business world is also changing. Following founder Kim Jong-hee, Chairman Kim Seung-yeon, who has led the group for over 40 years, has grown the group by revealing his competitive spirit at every critical moment. It is expected that the succession process will accelerate around his three sons, Kim Dong-kwan, Kim Dong-won, and Kim Dong-sun. This article reviews the history and secrets of Hanwha Group's growth and its future governance restructuring on the occasion of its 70th anniversary.

[Asia Economy Reporter Oh Hyun-gil] Chairman Kim Seung-yeon, who took office at the age of 29 and has led Hanwha Group for over 40 years, has embarked on another challenge. Inside and outside the group, there is anticipation that the acquisition of Daewoo Shipbuilding & Marine Engineering will become another milestone in Chairman Kim's M&A history. Attention is focused on whether he, who has grown the group's sales more than 60 times over 40 years through aggressive M&A at decisive moments, will transform Hanwha Group once again.

Born in 1952, Chairman Kim is the same age as Hanwha Group, which was launched in October 1952 (formerly Korea Explosives). After the sudden passing of founder Kim Jong-hoe in 1981, Chairman Kim inherited the company and grew Hanwha Group from 19 affiliates and total assets of 754.8 billion KRW to 91 affiliates and total assets of 229 trillion KRW.

The secret to growth lies in bold M&A. Shortly after taking office, Chairman Kim faced two oil shocks that severely contracted the petrochemical market. At that time, Hanyang Chemical and Korea Dow Chemical (now Hanwha Solutions Chemical, Advanced Materials Division) were running deficits of 7.5 billion KRW and 43 billion KRW, respectively.

However, Chairman Kim decided to acquire the two companies. Despite opposition within the group, with concerns that there must be reasons for global companies withdrawing from the market, Chairman Kim judged that the future of petrochemicals was not bleak and that the international economy would soon recover, encouraging the acquisition.

Chairman Kim instructed, "Show strong intent to acquire but negotiate firmly on the price," and succeeded in acquiring under very favorable conditions, including full payment of the purchase price in installments.

After the acquisition, the petrochemical market quickly recovered as Chairman Kim predicted, and within a year, both companies returned to profitability. Currently, Hanwha Solutions Chemical Division has established itself as a core company of the group, exemplifying Chairman Kim's bold decision-making at critical junctures.

Hanwha, which has grown through heavy and chemical industries such as explosives and petrochemicals, has expanded its business areas through M&A. In 1985, it successfully entered the distribution and leisure business by acquiring Hanyang Distribution (now Galleria) and Jeong-A Group (now Hanwha Hotels & Resorts).

Even while undergoing painful restructuring during the foreign exchange crisis, Chairman Kim did not slow down on M&A. In 2002, he acquired Daehan Life Insurance (now Hanwha Life Insurance), which was under special audit by financial supervisory authorities due to major shareholder misconduct and affiliate bad loans. Chairman Kim is famous for giving up all CEO positions of affiliated companies he held at the time and dedicating himself solely to Daehan Life Insurance as CEO without pay for two years.

Daehan Life Insurance, which was losing about 2.3 trillion KRW at the time of acquisition, turned profitable in six years, and its total assets, which were only 29 trillion KRW, grew to 100 trillion KRW in 2016 and 127 trillion KRW in 2020. Additionally, the acquisition of German solar company Q-Cells (now Hanwha Q-Cells) in 2012 and the acquisition of four defense and chemical affiliates from Samsung Group in 2014 are also cited as examples of Chairman Kim's business insight and steadfast execution.