Hanwha’s Kim Dong-seon to raise his stake in Galleria to 19.86%

Kim Dong-seon, vice president of South Korea’s Hanwha Galleria Corp. and the third son of Hanwha Group Chairman Kim Seung-yeon, plans to buy a 17.54% stake in the Galleria Department Store operator to strengthen his control over Hanwha Galleria.

In a regulatory filing on Friday, Hanwha Galleria, a unit of chemicals-to-defense conglomerate Hanwha Group, said the junior Kim will publicly purchase 34 million shares, estimated at 54.4 billion won ($40.6 million), from the main Kospi market from Aug. 23 through Sept. 11.

Following a successful purchase, his stake in Hanwha Galleria would rise to 19.86% from the current 2.32%.

In turn, the total share ownership of Hanwha Galleria by Kim Dong-seon, his family members and friendly shareholders would rise to 57.71% from 40.17%.

Kim’s share purchase price is set at 1,600 won per common share — a 22.8% premium on the stock’s closing price of 1,303 won on Thursday.

NH Investment & Securities Co. is the lead manager of the stock purchase.

Encouraged by the planned stock purchase, investors on the Korea Exchange snapped up Hanwha Galleria's shares on Friday, edging up the shares to close 16% higher at 1,511 won. The broader benchmark Kospi index ended down 0.2%.

Hanwha Galleria’s preferred stock closed up by the daily limit of 30% at 3,130 won.

TO STRENGTHEN RESPONSIBLE MANAGEMENT

Analysts said Kim Dong-seon, the youngest son of the Hanwha Group chairman, is raising his stake in Hanwha Galleria to ensure the company's stable and responsible management.

The son is leading the conglomerate’s retail and leisure business, including Hanwha Hotels & Resorts.

Last year, Hanwha Galleria established a wine business subsidiary and obtained exclusive domestic sales rights to Five Guys, one of the most popular US burger chains.

Hanwha Group said in February it is accelerating its generational power shift by promoting the group chairman’s second son Kim Dong-won to president of Hanwha Life Insurance Co.

The conglomerate also said at the time it is spinning off the Hanwha Solutions Galleria Division, which runs department stores, from Hanwha Solutions Corp. to list the new entity on Korea’s main bourse in March.

Kim Dong-kwan, the eldest son and heir apparent, is vice chairman of Hanwha Solutions. He manages the conglomerate’s defense, solar energy and petrochemical businesses.

RAISE FUNDS USING HANWHA ENERGY AS COLLATERAL

Since Kim Dong-seon virtually took over Hanwha Galleria’s management in February, the company’s shares have fallen, prompting him to boost its share price by acquiring more stocks from the market, industry officials said.

Now the market focus has turned to where he will secure the funds to finance his share purchase.

Industry sources said he may borrow funds using his 25% stake in Hanwha Energy Corp. as collateral.

Hanwha Energy is owned by the group chairman's three sons, with the eldest Kim Dong-kwan owning a 50% stake and the second son Kim Dong-wan holding the remaining 25%.

Write to Byeong-hwa Ryu and Eunhyeok Ryu at hwahwa@hankyung.com
In-Soo Nam edited this article.