Fair Trade Commission Approves Hanwha's Acquisition of KAI Shares: "No Competition Restriction"

The competition authority has approved Hanwha Group's acquisition of shares in Korea Aerospace Industries (KAI).

The Fair Trade Commission (FTC) announced today (the 31st) that it has approved the acquisition of KAI shares by Hanwha Aerospace and two other affiliates.

The FTC explained that the acquisition was approved without a general review as it was presumed to have no potential to restrict competition.

Hanwha Systems recently stated on the 10th that it had acquired a 3.45% stake in KAI on the open market over the past month, expanding its total stake in KAI to 15.89%.

Specifically, including existing stakes, Hanwha Systems' stake in KAI totals 4.98%, Hanwha Aerospace holds 9.90%, and Hanwha Aerospace USA holds 1.01%.

As it has acquired a stake of more than 15% in KAI, a listed company, Hanwha reported the business combination to the FTC.

Under the Fair Trade Act, the FTC is required to conduct a general business combination review when independent companies are integrated under a single control.

Even if a company acquires shares in another company, if a control relationship is not established through the acquisition, it is deemed to have no competition-restricting effect and is excluded from the general review target.

Hanwha's recent acquisition of KAI shares fell under this category.

According to the FTC, even after this share acquisition, the largest shareholder of KAI remains the Export-Import Bank of Korea, holding a 26.41% stake.

Although Hanwha becomes the second-largest shareholder of KAI, the National Pension Service also holds an 8.75% stake.

With government-side stakes reaching 35.16% as of now, the FTC judged that Hanwha securing a stake of 15% or more at this point does not amount to acquiring control capable of exerting substantial influence over the overall management of KAI.

However, the FTC explained, "If Hanwha additionally acquires KAI shares in the future to become the largest investor, concurrently holds one-third or more of KAI executive positions, or concurrently holds the position of KAI CEO, a new obligation to report a business combination will arise under the Fair Trade Act," adding, "In such cases, a business combination review will be conducted again."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.