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With U.S. entry, Hanwha mulls purchase of Poongsan's ammunition division for K9 rounds

Published: 06 Apr. 2026, 18:19 Updated: 06 Apr. 2026, 18:27

KIM MIN-YOUNG
[email protected]

A K9 self-propelled howitzer [HANWHA AEROSPACE]

Hanwha Aerospace, Korea’s largest defense firm that is pushing for U.S. market entry with its K9 howitzer, is considering acquiring the ammunition production division at Poongsan, according to an electronic disclosure filed on Monday, in a deal that could be worth up to 1.5 trillion won ($999 million).

Poongsan is Korea's largest conventional ammunition manufacturer, producing everything from 5.56-millimeter rifle rounds to 155-millimeter howitzer shells — the same shells already used in Hanwha Aerospace's self-propelled howitzer. The company also operates a major copper and copper alloy business.

Hanwha Aerospace is "continuously reviewing various business opportunities, including Poongsan's ammunition division, to strengthen defense competitiveness and enhance corporate value,” according to the company’s regulatory filing on Monday, responding to market speculation about the deal.

The move comes after the Korea Economic Daily reported on Saturday that Hanwha Aerospace had submitted a binding final bid for Poongsan's ammunition division in a private tender, and that it appeared to be the sole serious bidder in the process after other potential candidates, including Hyundai Rotem, did not participate.

If completed, the acquisition would allow Hanwha Aerospace to add ammunition to its existing portfolio of ground weapons systems, including the K9.

The strategic value of the deal lies not in simple business expansion but in completing a weapons platform. Hanwha Aerospace currently supplies ground weapons systems such as the howitzer to global clients, but has relied on external procurement for ammunition.

Bringing ammunition production in-house would allow the company to bundle howitzers and shells into a single export package, improving both price competitiveness and delivery stability.

Poongsan Group Chairman Ryu Jin [YONHAP]

"Major competitors such as Rheinmetall have already vertically integrated propellant charges, shells and launch systems," said Jeong Dong-ik and Choi Yong-hyun, analysts at KB Securities. "If the acquisition is completed, Hanwha Aerospace would be able to internalize margins in the shell segment and pursue turnkey supply contracts, which is expected to improve profitability and strengthen export competitiveness."

The deal would also complement Hanwha Aerospace's push into the U.S. market. Hanwha Defense USA announced plans in January to invest approximately $1.3 billion to build a munitions facility at Pine Bluff Arsenal in Arkansas under a lease awarded by the U.S. Army.

Hanwha Aerospace shares were up 0.07 percent from the previous session as of Monday. Poongsan shares surged 12.91 percent.

Hurdles remain before the deal is finalized. The deal would need to clear a merger review by the Fair Trade Commission given Poongsan's monopoly position in ammunition production, as well as approval from the Defense Acquisition Program Administration.

The deal aligns with government policy. Under the current push to strengthen the defense industry and expand exports, an integrated export model combining weapons systems and ammunition fits within the broader national strategy to optimize the defense supply chain.

The Fair Trade Commission building in Sejong is pictured in this file photo from 2018. [YONHAP NEWS TV]

If the deal gets the green light from the government, shareholder approval would be the next hurdle. Poongsan is reportedly considering a spinoff of its defense division into a separate entity before proceeding with the sale, a move that would require a special resolution at a shareholder meeting, with at least two-thirds of all shareholders voting in favor.

Poongsan Holdings, the largest shareholder, holds a 38 percent stake in Poongsan. Ryu Jin, chairman of the Poongsan Group, and other members of the controlling family hold 48.7 percent of Poongsan Holdings.

That means the spinoff cannot proceed on the controlling family's stake alone; the company would need the support of more than half of its remaining shareholders. Winning that support may not be straightforward, given that the defense division accounts for roughly 70 percent of Poongsan's operating profit.

Poongsan has a market capitalization of approximately 2.6 trillion won. The sale price for the newly spun-off defense entity is projected at around 1.5 trillion won, based on the 38 percent stake to be sold plus a 20 to 30 percent control premium.

BY KIM MIN-YOUNG [[email protected]]