November 21, 2024

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Kim Dong-sun, vice president and head of strategic management at Hanwha Galleria (Hanwha Galleria)

Kim Dong-sun, the youngest heir of Hanwha Group and vice president of Hanwha Galleria, has initiated a public tender offer to increase his control over the retail subsidiary.

According to a regulatory filing released Friday, Kim has offered to purchase 34 million shares, representing 17.54 percent of Hanwha Galleria, from Aug. 25 to Sept. 11. The offer price is set at 1,600 won ($1.19) per share, a 23 percent premium over the previous day's closing price of 1,303 won.

The filing noted that Kim's tender offer aims to "strengthen responsible management in collaboration with Hanwha Galleria’s major shareholders and special affiliates while establishing an efficient decision-making system to enhance the target company's business competitiveness and ultimately improve shareholder value."

Kim's move is seen by industry watchers as a strategic effort to solidify his control over Hanwha Galleria and establish a foundation for its independence.

Should the tender offer succeed, Kim's stake in the company will rise to 19.86 percent, up from his current 2.32 percent. This would make him the largest individual shareholder, second only to Hanwha Group, which holds 36.31 percent.

The combined stake of Kim and his affiliates, including Hanwha Group, currently stands at 40.17 percent, according to the disclosure.

Kim Dong-sun, the third son of Hanwha Group Chairman Kim Seung-yeon and head of strategic management at Hanwha Galleria, has steadily increased his stake since the company spun off from Hanwha Solutions and listed in March last year.

The major tender offer comes as Hanwha Galleria grapples with weak performance and a declining stock price. Amid a prolonged slump in consumer spending, the company's department store division saw sales decline, leading to a consolidated operating loss of 4.5 billion won in the second quarter — the first loss since its listing.

The stock, which debuted at 2,130 won a share on March 31, 2023, fell to a low of around 1,000 won in October and has recently hovered between 1,100 and 1,300 won. Following the announcement of Kim's tender offer, the stock surged 18.64 percent on Friday to hit an intraday high of 1,579 won, before trading around 1,490 won by noon.

Kim will need approximately 54.4 billion won to complete the purchase. Industry reports suggest that he plans to fund the acquisition using his assets, likely by leveraging his 25 percent stake in Hanwha Energy, another Hanwha subsidiary owned jointly with his two brothers.

By Choi Ji-won (jwc@heraldcorp.com)