SEOUL — From a gunpowder producer to an all-round defense firm, Hanwha Corp. has emerged as the new defense giant in South Korea.
Founded in 1952 during the Korean War, the company is the root for Hanwha Group, the nation's 9th largest conglomerate.
The corporation completed its acquisition of Samsung Techwin and Samsung Thales on June 29.
The acquisition was signed last November when Samsung Electronics sold a 32.4 percent stake in Samsung Techwin, maker of the K9 self-propelled howitzer and aircraft engines, for $765 million, as part of a deal worth $1.8 billion between Samsung Group and Hanwha Group.
Samsung Techwin owns a 50 percent stake in Samsung Thales, a precision weapons maker jointly funded by the French Thales Group, so Hanwha Corp. gains managing rights over the company.
With the acquisition of Samsung's defense branches, the revenue of Hanwha Corp. could nearly triple.
Last year, Hanwha Corp. recorded $1.03 billion 28.7 925 million in defense sales of ammunition, bomb fuses, rockets and UAVs.
Samsung Techwin had about $904.8810 million and Samsung Thales $580 million. Combined, Hanwha Corp. could rack up $2.3 billion of sales.
"As the top defense manufacturer in Korea, we'll compete with the world's top 30 defense firms and further increase our presence in the global defense market," said Lee Sung-soo, senior vice president of operations at Hanwha Corp.
Kim Dae-young, an analyst at the Korea Defense & Security Forum, anticipated that Hanwha's arms exports will rise.
"Hanwha is to be engaged in almost all sectors of the defense industry," said Kim Dae-young, an analyst at the Korea Defense & Security Forum. "In particular, the company will have an unrivaled position in the artillery manufacturing sector both for local supply and exports."
Hanwha's key artillery system is the Chunmoo multiple launch rocket system, which is based on a wheeled chassis and can fire an extended 130mm rocket up to 36 kilometers.
The K9 self-propelled 155mm howitzer will also boost the reputation of Hanwha Corp. The artillery is equipped with state-of-the-art mobility systems, including a 1,000-horsepower engine, and has a firing range of 40 kilometers.
Samsung Techwin signed a deal with Poland last December to sell 120 K9 howitzers. The deal is valued at about $320 million. The deal was the second of its kind after a deal with Turkey in 2011 to sell 350 K9 howitzers.
Jang Won-joon, director of the defense and aerospace industry team at the Korea Institute of Industrial Economics and Trade, pays more attention to the potential synergy between Hanwha and Samsung Thales.
"Samsung Thales produces radars, sensors and combat software systems, which are crucial for developing advanced weapons systems," Jang said. "That means Hanwha gets a foothold for developing a full range of modern warfare weapons from sensors to striking weapons."
Earlier this month, a delegation from the Thales Group visited Hanwha headquarters here to discuss business strategy in the future, according to Hanwha Thales officials.
"Both sides exchanged views on ways to help strengthen the firm's marketing here and abroad," a Hanwha spokesman said. "Discussions are ongoing to lay out business plans for the newly launched firm."
Hanwha Corp. is also expected to expand its influence in the aerospace industry, as it has a 10 percent stake in Korea Aerospace Industries (KAI).
KAI shares are split by Hanwha, Hyundai Rotem with some 10 percent, Doosan with some 5 percent. The government owns about 26 percent.
Hanwha has long sought to take over shares in KAI, and it may try to get more stakes in the future to develop itself into a Korean-version Lockheed Martin.
"Lockheed Martin, for instance, develops not only fighter aircraft, such as F-16 and F-35, but also guided missiles, radar systems and aerospace systems," the spokesman said. "Should Hanwha find ways to make a synergy effect between its existing weapons systems and KAI's aircraft and aerospace businesses, it could be a top defense manufacturer in the world."
Email: jsungki@defensenews.com
Jeff Jeong was the South Korea correspondent for Defense News.
