Hyundai Rotem to Buy Hyundai Wia's Defence Unit

South Korean tank maker Hyundai Rotem has agreed to acquire the defence business of sister company Hyundai Wia for 358.4 billion won, a move that will let it produce the main guns for its K2 battle tanks in-house, The Korea Times reported. The deal, approved by both boards and signed on Monday, came on the same day Hyundai Rotem posted a 10.3% fall in third-quarter net profit.

In its regulatory filing, Hyundai Rotem said the purchase is meant to “consolidate our defense business capabilities and strengthen our competitiveness in future weapons systems,” adding that vertical integration would support its growth in the sector.

What Hyundai Rotem is buying

The Hyundai Wia unit, known as its Special Business Division, makes large-calibre artillery including the 120mm main gun for the K2 tank and 155mm barrels for the K9 self-propelled howitzer. According to JKN, it also holds technology for remote weapon stations and naval close-in weapon systems, and generated 393.1 billion won in revenue last year, about 4.6% of Hyundai Wia’s total. That figure has roughly doubled since 2023 on the back of South Korea’s arms export boom.

The transaction is structured as a business transfer covering operating assets and liabilities, staff and intellectual property. BusinessKorea and JKN said the division was valued at 480 billion won, with land and buildings excluded from the price; JKN put the excluded real estate at about 117 billion won, which the unit will continue to use under a lease. Hyundai Rotem has said it will keep all transferred employees.

Hyundai Rotem currently buys K2 main guns from Hyundai Wia. Bringing them in-house is expected to cut costs, tighten supply management and strengthen its hand in offering local production and technology transfer to foreign buyers. The company won a second K2 contract from Poland worth about US$6.5 billion in August last year and later agreed a package with Peru covering 195 ground systems, including 54 K2 tanks.

Wia pivots to future mobility

For Hyundai Wia, the sale is part of a portfolio overhaul aimed at future mobility. JKN reported the company described the move as one of “selection and concentration”, noting the unit was profitable but had limited links to its long-term core strategy. Proceeds will go towards constant velocity joints, thermal management systems and robotics. Hyundai Wia earlier sold its spun-off precision machinery business to a Rylson-led consortium for 340 billion won.

The divestment carries a cost: BusinessKorea noted the defence unit contributed more than a fifth of Hyundai Wia’s operating profit, making the pace of growth in its mobility businesses a key test.

Earnings soften

Separately, Hyundai Rotem said net profit for July to September fell to 177.98 billion won (US$133.9 million), according to Yonhap. Operating profit dropped 11% to 247.1 billion won, while sales were almost flat at 1.62 trillion won. Its order backlog stood at 29.14 trillion won at end-September, down 1.26 trillion won from three months earlier.

What’s next

Hyundai Wia shareholders will vote on the sale at an extraordinary general meeting on 27 November, with dissenting investors able to sell shares back at 51,811 won each. JKN said the board may withdraw the deal if such buybacks exceed 140 billion won. Closing is targeted for 31 March 2027, and the companies still need to reach agreement with Hyundai Wia’s union, which has opposed the sale, on employment terms before completion.

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