From BigGo Finance · BigGo Finance · · 2m
Hyundai Wia Sells Defense Unit to Hyundai Rotem for $269.5M
Hyundai Wia transfers defense division to Hyundai Rotem for 358.4 billion won, strengthening vertical integration and credit ratings.
In brief
Hyundai Wia transfers defense division to Hyundai Rotem for 358.4 billion won, strengthening vertical integration and credit ratings. Hyundai Wia sells defense unit to Hyundai Rotem for $269.5 million, maintaining credit ratings while focusing on future mobility. Originally reported by BigGo Finance.
Deal Announcement
Hyundai Wia signed business transfer agreement to sell Special Business Division to Hyundai Rotem for 358.4 billion won (approximately $269.5 million).
Financial Impact
Defense unit accounts for 4.6% of revenue but generates 19.6% of company-wide EBIT, weakening near-term earnings power.
Hyundai Rotem Benefits
Hyundai Rotem will internalize gun barrel production, strengthening defense vertical integration and expanding revenue to 3.2153 trillion won.
Credit Rating Assessment
NICE Credit Rating assessed transaction impact on creditworthiness as limited, flagging new business profitability and operating efficiency gains.
Transaction Timeline
Deal closes by March 31, 2.027, following special resolution at shareholders' meeting on November 27, 2024.
Defense Segment Performance
Defense segment revenue: 393.1 billion won (4.6% of total), assets: 354.9 billion won (5.0% of total), EBIT: 40 billion won (19.6% of total).
Auto Parts Decline
Hyundai Wia's auto parts EBIT fell from 218.6 billion won in 2023 to 157.7 billion won in 2024, margin dropped from 2.0% to 1.5%.
Reinvestment Strategy
Hyundai Wia will channel sale proceeds into HVAC systems and target 14.8 trillion won revenue by 2035 with 5.9% annual growth.
Financial Health
Hyundai Wia has negative net debt of 284.6 billion won, debt-to-equity ratio of 73.5%, and net cash position.
Hyundai Rotem Financials
Hyundai Rotem's defense segment revenue tripled to 3.2153 trillion won, EBIT expanded to 967.3 billion won, margin fell to 25.6%.
Hurdles to Close
Deal may be withdrawn if appraisal rights exceed 140 billion won (approximately $105.3 million) by dissenting shareholders.
Valuation Details
Defense unit valued at 480 billion won (approximately $361.0 million) using free cash flow to firm method.
What to remember
Hyundai Wia sells defense unit to Hyundai Rotem for $269.5 million, maintaining credit ratings while focusing on future mobility.
