Hanwha Aerospace’s attempt to acquire Poongsan Corporation's ammunition unit has fallen through, likely due to a pricing gap, according to industry sources.
Hanwha Aerospace said Thursday it had “reviewed various business opportunities, including Poongsan’s ammunition division, but decided to halt its acquisition review,” after Poongsan announced it was no longer pursuing a sale.
The move follows reports last week that Hanwha had submitted a final bid for the unit. Market estimates had valued a potential 38 percent stake sale at around 1.5 trillion won ($1 billion), implying a total enterprise value of roughly 3.8 trillion won — higher than Poongsan’s market capitalization of about 2.8 trillion won.
Sources said differences in valuation expectations likely derailed the deal, with Poongsan seen seeking a higher price for the division, which generates more than 70 percent of its operating profit.
The collapse marks a setback for Hanwha Aerospace’s push to build a vertically integrated defense portfolio. The company has been seeking to expand beyond platform sales — such as self-propelled howitzers — into a bundled model combining weapons systems with ammunition supply.
Such integration would provide a more stable revenue base. While weapons sales tend to be cyclical and contract-driven, ammunition demand is recurring once systems are deployed.
Had the deal gone through, Hanwha’s export strategy was expected to shift toward package-based offerings that combine equipment, munitions and long-term support — potentially boosting contract size and earnings visibility.
Shares of Poongsan Holdings fell sharply on the news, trading at 46,450 won a share as of 3 p.m. Friday, down 13.56 percent from a day earlier.
By Byun Hye-jin (hyejin2@heraldcorp.com)
