Daily Brief South Korea: Hanmi Science, Hanwha Aerospace and more

In today’s briefing:

Backstory on the Hanmi Science Showdown & KKR’s Likely Tender Offer
Hanmi Science: If Talks With Mum and Sister Break Down, Then KKR May Provide a Partial Tender Offer
Hanwha Aerospace: Spin Off of Semiconductor Equipment and Video Surveillance Units

Backstory on the Hanmi Science Showdown & KKR’s Likely Tender Offer

The victorious brothers plan to join forces with KKR to secure over 51% ownership of Hanmi Science. They aim to persuade the mother and daughter to part with their shares.
Should this negotiation fail, KKR is prepared to initiate a tender offer in the open market, intending to acquire an additional 10-15% of Hanmi Science’s shares.
KKR can target a maximum of 16%. With 10-15% aimed for, this tender offer will cause significant price impact.

The 2024 AGM of Hanmi Science is over and the two Lim brothers have control of the company. Nonetheless, the fight for the control of Hanmi Science is not over.
There is an increasingly probable scenario where the KKR private equity firm gets involved, joining hands with the Lim brothers.
If mum and sister do not sell their shares (which seems to be the higher likely scenario), then KKR may issue a tender offer to the remaining minority shareholders.

On 5 April, Hanwha Aerospace (012450 KS) formally announced that it will spin off its semiconductor equipment and video surveillance units which contributed to about 16% of its revenue.
We are Negative on Hanwha Aerospace mainly due to valuations. Its share price has risen so much in the past year that its valuations are no longer attractive.
Hanwha Aerospace is trading at premium valuation to Lockheed Martin on an EV/EBITDA basis. Despite its recent strong growth, Hanwha Aerospace is no Lockheed Martin.

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