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South Korea’s KFTC Clears Hanwha’s KAI Stake Purchase, Leaves Door Open to New Antitrust Review

By  |  August 31, 2026
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South Korea’s antitrust regulator approved Hanwha Group’s increased investment in Korea Aerospace Industries Ltd., finding that the defense conglomerate’s 15.89% holding doesn’t give it sufficient control over the country’s sole aircraft manufacturer.

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    The Korea Fair Trade Commission, or KFTC, concluded that Hanwha’s current ownership position isn’t enough to exert substantial influence over KAI’s overall management, according to KED Global. The decision clears a regulatory hurdle for Hanwha as it builds a broader aerospace and defense portfolio.

    Hanwha’s combined stake reached 15.89% after Hanwha Systems Co. acquired an additional 3.45% of KAI in the market, according to KED Global. Hanwha Aerospace Co. holds 9.9% of KAI, while other Hanwha affiliates account for the remainder of the group’s position.

    Crossing the 15% ownership threshold triggered scrutiny under South Korea’s competition rules. The KFTC determined, however, that the investment doesn’t currently establish the kind of control that would warrant a broader competition review, according to the KED Global report.

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    KAI remains anchored by government-linked investors. The Export-Import Bank of Korea is its largest shareholder with 26.41%, while the National Pension Service owns 8.75%, according to KED Global and the KFTC. Together, those holdings leave Hanwha well short of the influence exercised by the government-related shareholders.

    The regulator’s clearance isn’t necessarily the final word on Hanwha’s relationship with KAI. The KFTC said another merger review could be required if Hanwha increases its ownership enough to become KAI’s largest shareholder or gains significantly greater representation in the aircraft maker’s management, according to KED Global.

    That qualification puts a regulatory marker on any further expansion by Hanwha. The group has been increasing its exposure to KAI as it seeks to connect businesses spanning aircraft, satellites, launch vehicles, warships and other defense technologies, KED Global reported.

    KAI occupies a strategically important position in South Korea’s defense industry. The company manufactures the KF-21 fighter and FA-50 light combat aircraft as well as military helicopters, making its ownership structure particularly significant as Seoul seeks to expand defense exports.

    Hanwha, meanwhile, already operates across multiple layers of the defense supply chain. Its businesses include aerospace propulsion, weapons, radar and other military systems, giving closer ties with KAI the potential to deepen vertical integration in South Korea’s defense sector.

    For now, the KFTC’s decision allows Hanwha to retain its 15.89% investment without the regulator treating the holding as conferring control. Any further push toward managerial influence or a larger ownership position could bring the transaction back before the KFTC.

    Source: KED Global