On May 4 Acquires Additional 0.1% of KAI, Raising Stake to 5.09% and Reclassifying Holding As Participation in Management
Three Hanwha defense companies are presenting future integrated weapon systems based on AI technology at WDS 2026 held in Riyadh, Saudi Arabia. (Photo provided by Hanwha Aerospace)
Hanwha Aerospace on May 4 additionally acquired 100,000 shares, or 0.1%, of Korea Aerospace Industries, Ltd. (KAI). Previously, Hanwha Aerospace had disclosed that, together with affiliates including Hanwha Systems, it had secured a 4.99% stake in KAI on March 16. With this additional purchase, the KAI stake secured by Hanwha Aerospace, including related companies, has increased to 5.09%.
Hanwha Aerospace plans to invest a total of KRW 500.0 billion ($359.72 million) by the end of this year to purchase KAI shares, including the amount used for this latest purchase (2,958,580 shares based on the closing price of KRW 169,000 on April 30, stake ratio 3.04%; subject to change depending on future purchase prices).
As its stake exceeded 5%, Hanwha Aerospace changed the purpose of its KAI shareholding from “simple investment” to “participation in management.” The company said it is reviewing specific plans for participation in management. If participation in the decision-making process becomes necessary, it intends, as a shareholder, to proceed in accordance with lawful procedures and methods so as to align with the company’s management objectives, while fully taking into account the circumstances and interests of the company, shareholders, and stakeholders.
As global conflicts intensify, including the recent Middle East war and the Russia-Ukraine war, and as battlefield environments become increasingly unmanned and intelligent, major countries overseas are concentrating efforts on fostering independent large-scale defense companies integrating “land, sea, air, and space.” Given the reality of “all-domain” operations, including satellites and data analysis (AI), as seen in the Middle East war, only larger national champion companies can stay ahead in global competition.
Germany’s Rheinmetall, centered on ground weapon systems, recently acquired a naval shipbuilding division and made a joint investment to develop next-generation laser weapons.
In particular, as space sovereignty becomes more important, the trend toward larger and more diversified structures among competing companies in major countries is accelerating further. France’s Airbus and Thales, along with Italy’s Leonardo, consolidated their space businesses to respond to SpaceX. Britain’s BAE Systems and the United States’ Northrop Grumman Group each acquired a satellite manufacturing company and a company with space launch vehicle technology.
Accordingly, in South Korea as well, the establishment of a “national champion” through the combination of aerospace and defense has emerged as an inevitable national task. For individual South Korean defense companies to compete independently in the global market is little different from being hopelessly outmatched.
Hanwha Aerospace’s expanded KAI stake is intended to strengthen global export competitiveness in the defense and aerospace sectors and to broaden cooperation in future aerospace businesses based on a strategic partnership between the two companies. Hanwha Aerospace has competitiveness in fields including ground defense, aircraft engines, avionics, radar, and space launch vehicles, while KAI, as the country’s only company developing and manufacturing complete aircraft, also possesses technologies in satellite development and aerial combat systems, creating expectations of significant synergy through cooperation. This would enable the securing of advanced technologies spanning manned-unmanned integrated systems and aerospace.
If the partnership between the two companies is strengthened, they can expand orders in the global defense and aerospace market through a one-team strategy. Based on Hanwha Group’s experience in identifying future growth engines, preemptive investment, and know-how from overseas success, KAI is also expected to enhance its export competitiveness. Last year, exports accounted for more than 50% of both companies’ business, but because KAI’s mainstay aircraft business has a structure requiring massive fixed costs, it is difficult to raise profitability unless export volumes above a certain level are steadily secured.
The two companies have already expanded cooperation across various defense fields, including strengthening the export competitiveness of the KF-21 and building footholds for overseas expansion, developing a long-range air-to-air missile for domestically produced fighter aircraft, and proposing a performance improvement project for helicopters used in special operations. To continue this close cooperative relationship more stably and sustainably, they have now established a foundation for participation in management and strategic cooperation through equity investment.
Previously, in February, Hanwha Aerospace and KAI signed a Memorandum of Understanding (MOU) for defense and aerospace cooperation and established a mid- to long-term cooperation framework in future core business areas. The MOU includes cooperation aimed at strengthening the export competitiveness of K-defense exports and fostering the aerospace and defense industry ecosystem in the Gyeongnam region, covering areas such as the localization development and system integration of advanced aircraft engines, joint development and global marketing of unmanned aerial vehicles for export, joint entry into the global commercial space market including satellites, launch vehicles, and services, and fostering the defense and aerospace industrial ecosystem and regional supply chain.
Jung Min-hee
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