[Edaily Reporter LEE YUNHWA ] HYUNDAI WIA(011210)is transferring its Special Business Division—which handles the defense sector—to HYUNDAI ROTEM and accelerating its business restructuring centered on future mobility. The proceeds from the sale will be reinvested in growth businesses such as thermal management systems (TMS) and robotics.

HYUNDAI WIA announced on the 19th that its board of directors had decided to transfer the Special Business Division to HYUNDAI ROTEM through a comprehensive business transfer. The transfer price is 358.4 billion won, and the contract was signed on the same day. The transaction will be finalized on March 31 of next year, following a special resolution at the shareholders’ meeting on the 27th of next month.

HYUNDAI WIA’s Special Business Division is the company’s founding business, dating back to its establishment in 1976. It primarily manufactures large-caliber artillery, such as the K9 self-propelled howitzer barrel and the K2 main battle tank’s main gun. HYUNDAI WIA explained that the business value of the Special Business Division was recognized at 480 billion won. HYUNDAI WIA’s advisor, Deloitte Anjin, and HYUNDAI ROTEM’s advisor, SamIl Accounting Corporation, calculated the value using the Free Cash Flow to the Firm (FCFF) method, while EY Han Young reviewed the fairness of the valuation. This valuation represents an Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) multiple of 9.5x, exceeding the average (8.4x) for major domestic defense parts manufacturers.

The actual purchase price of 358.4 billion won reflects the deduction of 117 billion won in real estate (land and buildings) excluded from the transfer and a net asset adjustment of 4.6 billion won from the enterprise value. HYUNDAI WIA will retain ownership of the excluded real estate. During the lease period, it will lease the property to HYUNDAI ROTEM to generate rental income, and upon expiration of the lease, it plans to use the site as a production facility for new business ventures.

HYUNDAI WIA determined that its special business operations, while offering short-term profitability, were non-core businesses with limited alignment with its mid- to long-term core strategies. The company viewed the defense sector as having significant growth uncertainty due to fluctuations in the defense industry’s business conditions and changes in weapons systems; furthermore, given the industry’s structure centered on system integrators, it saw limitations on the growth potential of component manufacturers. The company explained that maintaining the business and pursuing new growth opportunities would require large-scale investment, and that investing in the defense sector would constrain its ability to invest in core businesses. The decision also reflects the judgment that now is the optimal time for a sale, as the company can secure a favorable valuation amid the global trend toward defense sector expansion.

Through this sale, HYUNDAI WIA will streamline its business structure to focus on mobility. The plan is to divide the business into TMS and Robotics (for development), Constant Velocity (for expansion), and Engines, Modules, and Drivetrains (for maintenance), and to concentrate investment resources on growth businesses. The company will strengthen its positioning as a supplier of core components for electrified vehicles and reduce its reliance on low-margin and structurally limited businesses to shift toward a high-value-added, systems-centric model. It will also strengthen its alignment with the HyundaiMotor Group’s strategies for software-defined vehicles (SDVs), electric vehicles, and robotics.

The target is 14.8 trillion won in revenue by 2035. This requires an average annual growth rate of 5.9% from this year’s projected 8.8 trillion won. Based on this year’s plan, the Mobility segment is projected to generate 8 trillion won (91%), TMS and Robotics 400 billion won (4%), and Special Business 400 billion won (5%). By 2035, the company plans to increase the share of growth businesses to 10.8 trillion won (73%) for Mobility and 4 trillion won (27%) for TMS and Robotics.

The company will simultaneously expand its global production bases and invest in R&D infrastructure and overseas operations. It also plans to strengthen its capabilities in intelligent solutions based on robotics and autonomous driving. A HYUNDAI WIA official explained, “The decision to sell the Special Business Division is part of our strategy to reorganize our business portfolio around future mobility (electrification and SDV).”

However, variables remain, including opposition from the labor union, approval at the shareholders’ meeting, and the scale of the share repurchase request. If the total amount of the repurchase request exceeds 140 billion won, the transfer can be withdrawn by a board resolution.