Hanwha Energy announced on Nov. 6 its decision to acquire 5,436,380 shares, equivalent to a 7.25% stake, in Hanwha Corp. from Korea Zinc at a price of 27,950 won per share. This transaction, valued at 151.9 billion won, is based on the average stock price over the past 30 days.

Hanwha Energy will see its stake in Hanwha Corp. increase from 14.90% to 22.16% following this acquisition. Korea Zinc, currently embroiled in a management rights dispute with Young Poong, is expected to use the funds raised from this share sale to buy back its own shares, a strategic move to consolidate control amid the ongoing proxy battle.

A Hanwha official explained, “As a major shareholder, we decided to acquire the shares to strengthen responsible management and enhance shareholder value.” The share transaction was made through mutual agreement between Hanwha Energy and Korea Zinc, with both companies believing that the deal aligns with their mutual interests. Additionally, Hanwha Group will continue to hold a 7.75% stake in Korea Zinc through Hanwha Corp. and Hanwha Impact.

The business community views this transaction as a dual benefit, bringing the three sons of Hanwha Group Chairman Kim Seung-youn closer to becoming the largest shareholders of Hanwha Corp. and smoothly advancing the succession process. Hanwha Energy is wholly owned by Chairman Kim’s three sons: Vice Chairman Kim Dong-kwan (50%), President of Hanwha Life Kim Dong-won (25%), and Vice President of Hanwha Galleria Kim Dong-sun (25%). Currently, the largest shareholder of Hanwha Corp., a holding company, is Chairman Kim with a 22.65% stake, and the three sons’ combined stake has now risen to a similar level.

Korea Zinc’s urgent need to secure funds for a proxy battle against Young Poong has driven this sale. The funds from this transaction will be used to increase its treasury shares, a common strategy in management rights disputes to consolidate control and increase the value of remaining shares.

Hanwha Group Vice Chairman Kim Dong-kwan is known to have a close relationship with Korea Zinc Chairman Choi Yoon-beom. This relationship is interpreted as Hanwha indirectly supporting Choi through maintaining its stake and business cooperation, even though they cannot intervene directly. A Hanwha official stated, “We plan to continue our business cooperation in the eco-friendly energy sector,” highlighting the strategic alignment towards sustainable and environmentally friendly business practices.

Source: Businesskorea