[M&A Written Hanwha 70-Year History]③ Succession Work Aligned with Group Governance Restructuring 'No Issues'

Hanwha Solutions Human and Physical Division
Outline of Three Brothers' Succession Business
Kim Dong-kwan Oversees Solar Power and Defense
Kim Dong-won 'Finance', Kim Dong-sun 'Hotel'

Editor's NoteHanwha Group, which will celebrate its 70th anniversary on October 9, is preparing for a new leap forward through continuous innovation and active mergers and acquisitions (M&A). Starting from explosives, Hanwha Group has built its core growth engines in solar energy, defense, and aerospace through chemical, distribution, and financial sectors. Recently, with the push to acquire 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 in every crisis. It is expected that the succession process will accelerate around the three sons, Kim Dong-kwan, Kim Dong-won, and Kim Dong-sun. This article reviews the history and secrets of growth and future governance restructuring of Hanwha Group at the 70th anniversary milestone.

The succession process at Hanwha, which is solidifying its third-generation responsible management system, is proceeding in an orderly manner. In the course of Hanwha Group's business restructuring, it is analyzed that succession will be divided mainly into three sectors?solar energy and defense, financial sector, and hotel and resort sector?each inherited by the three Hanwha brothers.

◆ Kim Dong-kwan Leading Solar Energy and Defense as Future Growth Engines = According to Hanwha Group on the 28th, Kim Dong-kwan, the eldest son of Chairman Kim Seung-yeon and Vice Chairman of Hanwha Solutions, which he leads as CEO, has initiated a business structure reorganization. On the 23rd, an extraordinary board meeting was held, deciding to spin off the Galleria division through a split-off and to spin off the automotive lightweight materials and EVA (ethylene vinyl acetate) sheet businesses within the advanced materials division through a split-up. Furthermore, there are plans to attract investment by partially selling shares of the newly spun-off company (tentatively named Hanwha Advanced Materials).

Kim, who was promoted last month, is solidifying the 'Kim Dong-kwan one-top' system by leading Hanwha Group's future growth businesses in defense, solar energy, and aerospace.

So far, Kim's 'management performance' is evaluated as satisfactory. In particular, Kim played a significant role in Hanwha Solutions' Q CELLS division (solar energy subsidiary) quickly capturing the U.S. and European markets. The expansion of the U.S. solar business, including securing production facilities in the U.S., and the active promotion of eco-friendly energy businesses in Europe were successful strategies that anticipated the potential of these regions early and focused business capabilities accordingly. The defense sector, centered on Hanwha Aerospace, is also expected to gain new momentum with the acquisition of Daewoo Shipbuilding & Marine Engineering. Kim's role has become more important as he will be in charge of the strategic division of Hanwha Aerospace following last month's personnel changes.

◆ Will the Three Hanwha Brothers Each Inherit Solar Energy, Finance, and Hotels? = Especially with the recent personnel and physical split of Hanwha Solutions, the outline of the business sectors to be inherited by the three Hanwha brothers is becoming clearer. With this split, Hanwha Galleria will become a subsidiary of Hanwha Corporation, the group's holding company, instead of a grandchild company. A personnel split means that existing shareholders receive shares of the new company in proportion to their current holdings. Since Hanwha Corporation currently holds 36.35% of Hanwha Solutions' shares, it will also hold 36.35% of the newly established Hanwha Galleria. Hanwha Solutions will divide its existing shares at a ratio of 9 (continuing Hanwha Solutions) to 1 (new Hanwha Galleria), and Hanwha Galleria, formerly a subsidiary, plans to be newly listed in March next year.

Once Hanwha Solutions and Hanwha Galleria become subsidiaries of Hanwha Corporation, the method of dividing and inheriting the group will gain momentum. The scenario envisions Vice Chairman Kim taking charge of the group's core businesses such as solar energy, defense, and chemicals; Vice President Kim Dong-won handling the financial sector including Hanwha Life; and Executive Director Kim Dong-sun overseeing hotels, resorts, and department stores. Currently, the major shareholders of Hanwha Corporation are Chairman Kim Seung-yeon (22.65%), Vice Chairman Kim Dong-kwan (4.44%), Vice President Kim Dong-won (1.67%), and Executive Director Kim Dong-sun (1.67%).

Going forward, how and how much Vice Chairman Kim will secure shares of Hanwha Corporation is expected to be a key issue. Kim currently holds about 4.44% of Hanwha Corporation's shares. The business community expects that Kim will increase his control through Hanwha Energy, which holds 9.70% of Hanwha Corporation's shares. Kim's stake in Hanwha Energy is 50%.