Hanwha's Kim Seung-yeon and Kim Dong-kwan's Consecutive M&A Gambles, Will They Work Again?

Daewoo Shipbuilding Assets Total 92 Trillion
Defense, Eco-friendly Energy + Shipbuilding Business
Interest in Creating New Business Opportunities

Hanwha Group, which has grown through active mergers and acquisitions (M&A) during times of change and crisis, has once again made a bold move. After a second attempt following 2008, it has acquired Daewoo Shipbuilding & Marine Engineering (DSME), the world's third-largest shipbuilder. The business community is closely watching whether the group's strategy, which has identified defense and eco-friendly energy as future growth engines, will become sharper or duller after this acquisition.

As of the 19th (Q3 report), the number of affiliates under Hanwha Group, led by Chairman Kim Seung-yeon, stands at 92. With 7 listed affiliates and 85 unlisted affiliates, it manages the third-largest number of business companies among the top 10 conglomerates, following SK and GS. When Chairman Kim took office in 1981, the number of affiliates was around 19. Over about 40 years, that number has increased more than fourfold. During this period, total assets grew from approximately 754.8 billion KRW to 80 trillion KRW, and sales increased from 1.1 trillion KRW to 52.8361 trillion KRW. Adding Daewoo Shipbuilding’s assets of 12 trillion KRW brings the group’s total assets to 92 trillion KRW, approaching the level of POSCO Group, ranked sixth with 96 trillion KRW.

M&A has been the core of Hanwha Group’s growth history. The business community inside and outside the industry evaluates that investments made without retreating during crises have borne fruit. In 1982, the year after Kim became the group’s head, he acquired Hanyang Chemical (now Hanwha Solutions), which was struggling due to the second petrochemical shock. The petrochemical business has since become the group’s largest pillar. The 2002 acquisition of Daehan Life (now Hanwha Life) surprised the business world. The accumulated losses of 2.3 trillion KRW were completely eliminated within six years, and the financial sector was developed into a core part of the group.

The foundation for the group’s future growth engines in eco-friendly energy and defense was also built through M&A. Kim Dong-kwan, Vice Chairman of Hanwha Solutions, who joined Hanwha Group in 2010, has been involved in M&A for new growth businesses, expanding the group’s scope. The solar energy business was already established a decade ago. In 2010, Hanwha acquired Solarfun Power Holdings (Hanwha Q CELLS), a Nasdaq-listed company.

Then, in 2012, after the European financial crisis, when German Q CELLS (Hanwha Q CELLS), the number one solar company in Europe and the U.S., filed for bankruptcy, Hanwha acquired it and relaunched it under the name “Hanwha Q CELLS.” Vice Chairman Kim Dong-kwan, then head of the planning office at Hanwha SolarOne, led the acquisition. Despite the deteriorating solar market conditions at the time, Hanwha chose solar energy as a new growth engine and has recently seen the results. The 2015 big deal with Samsung is considered the most important event in Hanwha’s M&A history. Hanwha successfully completed a massive M&A deal worth about 2 trillion KRW, acquiring Samsung General Chemicals and Samsung Total (petrochemicals), as well as Samsung Techwin and Samsung Thales (defense industry) from Samsung. Through business advancement and synergy enhancement, Hanwha secured the top position in the domestic defense sector.

The acquisition of Daewoo Shipbuilding & Marine Engineering once again puts Hanwha Group, known for its resilience in crises, to the test. The plan is to create synergy in both defense and eco-friendly energy businesses through the shipbuilding industry. DSME has competitiveness in special vessels such as warships, submarines, and icebreakers. Hanwha Group is expected to leverage its strengths in shipbuilding, marine defense, and offshore plant sectors to create new business opportunities. However, turning DSME, which recorded a loss of about 1.75 trillion KRW last year, back to profitability will not be an easy task.

This content was produced with the assistance of AI translation services.