South Korea’s largest defence firm, Hanwha Aerospace, submitted a bid to buy the defence business of ammunition maker Poongsan in a deal that could be worth around 1.5 trillion won ($1.1 billion), a South Korean newspaper reported on Friday.
Hanwha Aerospace submitted a proposal in a private tender process for a controlling stake in Poongsan’s business that the market estimated would be worth around 1.5 trillion won with a management premium factored in, according to a report by the Korea Economic Daily, citing an unnamed investment banking source.
Hanwha Aerospace declined to comment. Poongsan said the company is considering a number of measures, including reorganising its business structure, but nothing has been decided.
Poongsan is the supplier for most of South Korea’s ammunition needs, from small-caliber rounds to large-caliber shells and missile warheads – and it exports its products.
Local media reported last month that it planned to sell the defence unit and analysts have said the sale is likely driven in part by the fact that Chairman Ryu Jin’s eldest son has U.S. citizenship, which restricts succession-management rights.
Under South Korea’s current defence-business law, foreign nationals cannot exercise management rights at defence companies.
Hanwha Aerospace is a leading exporter of land-based arms like the K-9 self-propelled howitzer.
Source: Reuters.com