Hanwha's Bid for KAI Raised at Parliamentary Audit Without Kim Dong-kwan; CEO Kim Jong-chul Says "Not Everyone Can Own It"

What happened

At a parliamentary audit on October 20, lawmakers asked about Hanwha's growing stake in KAI. Eximbank's president, Hwang Gi-yeon, said there is no plan to sell KAI. KAI's CEO, Kim Jong-chul, warned that if Hanwha gains control, competition in the aerospace industry could shrink. The KAI union also held a protest in front of the presidential office, the Cheong Wa Dae, to oppose Hanwha's takeover.

Key numbers

• Eximbank owns 26.41% of KAI.
• In August, Hanwha raised its stake to 15.89% and became the second-largest shareholder.
• The gap between Eximbank and Hanwha is 10.52 percentage points.
• Eximbank ordered an 1.8 billion won consulting project on aerospace competitiveness in August.
• About 1,200 union members joined the second protest.

Some background

Hanwha has changed its goal for the shares from simple investment to taking part in management. Because of this, people asked whether Eximbank was preparing to sell KAI or change how the company is run. Hwang said the consulting study was about how state-backed lenders should support the space and aviation industry. He also said the study did not include selling KAI shares.

Why it matters

KAI makes fighter jets and other defense products, so who controls it affects the whole aerospace and defense industry. The union says a takeover could lead to a monopoly, which means one company has too much control over a market. Kim said KAI's ownership would not change without the agreement of its members. The debate shows how much the government, lawmakers, and workers care about who runs this key company.

What to watch

• The union plans a third protest at the presidential office on November 3.
• The union wants the government to give an official answer and take action.
• Hanwha would need approval from the Minister of Trade, Industry and Energy, after getting the opinion of the Defense Acquisition Program Administration, to gain management control.
• The Fair Trade Commission's review of the deal, which the union says was not careful enough about monopolies.