Hyundai Wia is transferring its defense business, which has been a core part of the company since its founding, to Hyundai Rotem, an affiliate within the same group. Hyundai Wia will focus on future mobility businesses, while Hyundai Rotem will expand into the production of tank main guns, pursuing vertical integration in the defense sector.
Hyundai Wia announced that it decided at a board meeting on the 19th to transfer its Special Business Division to Hyundai Rotem for 358.386 billion won. The subject of the transfer includes all business assets and liabilities of the Special Business Division. The payment will be made in cash, with the transaction closing by March 31 next year.
The transfer price is calculated by deducting approximately 117 billion won for leased land and buildings from the operating value of the Special Business Division, which stands at 480 billion won. Real estate was excluded from the scope of the transfer. EY Han Young Accounting Firm, which conducted the external valuation, assessed the division's value at between 388.6 billion and 483.3 billion won using the discounted cash flow (DCF) method. The final amount may be adjusted based on changes in net assets from the valuation reference date at the end of last year until the transaction closing date.
The Special Business Division is Hyundai Wia's foundational business, dating back to the company's establishment in 1976. It primarily produces artillery pieces such as the barrel for the K9 self-propelled howitzer and the main gun for the K2 tank. As of the end of last year, the division recorded sales of 393.1 billion won and assets of 354.9 billion won, accounting for approximately 4.6% and 5% of the company's total, respectively.
Hyundai Wia explained that this transaction is a portfolio restructuring aimed at focusing on future mobility businesses. The company plans to use the secured funds for investments in new ventures. Additionally, it cited securing competitiveness through vertical integration in the defense sector and business diversification as the purpose of the acquisition.
Hyundai Wia is scheduled to hold a shareholders' meeting on the 27th of next month to approve the business transfer resolution by special resolution. Opposing shareholders will have the right to request the company to purchase their shares at 51,811 won per share from that day until December 16. If the amount of buyback requests exceeds or is expected to exceed 140 billion won, Hyundai Wia may withdraw the transfer by board resolution. This transaction is also subject to filing with the Fair Trade Commission.
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