Will Hanwha Group's M&A Alchemy Work in Food Tech Too?

Hanwha Group Reviews Acquisition of Ourhome Management Rights
Reevaluating M&A Achievements in Energy, Defense, and Shipbuilding

As major domestic conglomerates such as Samsung, SK, and Lotte continue their emergency management, Hanwha Group is actively pursuing mergers and acquisitions (M&A) to expand its business into the food tech sector, following its ventures in aerospace, shipbuilding, and eco-friendly energy.

According to the investment banking (IB) industry on the 20th, Hanwha Group has recently attracted attention for its proactive activities despite the recession, including reviewing the acquisition of management rights for Ourhome, the second-largest catering company in Korea, which belongs to the pro-LG faction. The acquisition is led by Hanwha Hotel & Resort, headed by Kim Dong-sun, the third son among the three sons of Kim Seung-yeon, chairman of Hanwha Group.

A Hanwha Group official stated, "We are reviewing various business sectors, but nothing has been concretely decided yet."

If Hanwha Group succeeds in acquiring Ourhome, it is expected to accelerate the resumption of its catering business. In 2020, Hanwha Group exited the catering business by splitting and selling the food material distribution and catering (FC) division of Hanwha Hotel & Resort to the private equity fund VIG Partners.

This review of acquiring management rights for Ourhome is understood to be led by Kim Dong-sun, the third-generation heir and Vice President in charge of Future Vision at Hanwha Galleria and Hanwha Hotel & Resort. The acquisition target is approximately 57.84% of Ourhome shares held by the late founder Ku Ja-hak’s eldest son, former Vice Chairman Ku Bon-sung (38.56%), and eldest daughter Ku Mi-hyun (19.28%).

Securing management rights is possible with this stake alone. The acquisition funds are expected to exceed 860 billion KRW. Ourhome’s enterprise value is estimated at around 1.5 trillion KRW based on 100% equity. However, there are also views that the acquisition may not be easy due to lingering management disputes among the second-generation owners of Ourhome.

Vice President Kim Dong-sun is aggressively expanding the business by promoting 'food tech' as a new business model. Hanwha Food Tech, a subsidiary of Hanwha Hotel & Resort, established a catering business division last month. The aerospace, defense, and energy businesses operated by Hanwha Group are favorable workplaces for securing catering contracts.

Most of Hanwha Group’s 'Cash Cows' Are Future Value Companies Absorbed Through M&A

Looking at Hanwha Group’s current cash cows and future value-creating affiliates, most of these businesses have expanded through M&A. In 2012, Hanwha entered the eco-friendly energy sector by acquiring German Q-Cells, a solar energy company. Subsequently, it laid the groundwork in the eco-friendly energy field by acquiring RES France, a renewable energy specialist, for 1 trillion KRW.

Samsung Techwin and Samsung General Chemicals, acquired in 2014, now serve as the core of Hanwha Aerospace and Hanwha Systems, the defense industry pillars of Hanwha Group. Hanwha’s defense sector is receiving global attention. Hanwha ranked 24th among the world’s top 100 defense companies published by the Stockholm International Peace Research Institute (SIPRI) in Sweden. This is a significant rise from 42nd place last year, with a sales growth rate of 53%.

In 2021, Hanwha actively invested in the aerospace sector by acquiring the domestic satellite company Satrec Initiative. In 2023, it acquired Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean). Hanwha Ocean is expected to record an operating profit of 97 billion KRW (forecast) in the fourth quarter of this year, achieving a turnaround to profitability compared to the previous year. This year, the three major shipbuilders are likely to achieve simultaneous profitability for the first time in 13 years since 2011.

This year, Hanwha Group also entered the U.S. shipbuilding industry for the first time among domestic companies by acquiring the Philly shipyard. This has established a foothold for entering the U.S. commercial and defense markets. A financial investment industry official said, "Hanwha Group seems to be diversely and well building a portfolio for the future."