Hanwha Techwin Co., a defense arm of South Korean large conglomerate Hanwha Group, was picked as the preferred bidder for Doosan DST, a defense unit of Doosan Group, raising expectations that Hanwha Techwin could move a step closer to joining global defense leaders.

Doosan Group and its sale advisor Credit Suisse said on Wednesday they selected Hanwha Techwin that offered 695 billion won ($604 million) for a 100 percent stake in Doosan DST held by Doosan Group (51 percent) and financial investors (49 percent) as the preferred bidder for Doosan DST. The market estimated the sale price of the full stake would range between 600 billion won and 700 billion won.

With Hanwha’s takeover of Doosan DST, Hanwha Group’s defense business is expected to jump to 4.2 trillion won in sales. Its defense business, which currently ranks 30th in the world, could move up to 24th place, said an unnamed official at Hanwha Group, adding that the takeover should pave the way for it to become one of the world’s 10th largest defense companies.

As Hanwha Group started as Korea Explosives in 1952, the defense business is its founding business. This is why Hanwha Chairman Kim Seung-youn has been making strenuous efforts to expand the defense unit despite its small contribution to the group’s overall sales for now. Hanwha purchased Samsung Techwin and Samsung Thales, former arms units of Samsung Group, in 2014 at 823.2 billion won, allowing Hanwha to become the country’s defense giant. Less than one and half years after such a mega deal, Hanwha is close to wrap up the deal to buy Doosan DST.

Hanwha Techwin CEO Shin Hyun-Woo said that the company’s push to buy Doosan DST is part of the company’s mid- and long-term strategies to make another leap forward to become a global defense company. “With the takeover, we want to enhance competitiveness by units and improve efficiency to make forays into overseas markets,” Shin added.

Hanwha Techwin stocks ended up 1.4 percent at 37,400 won in Seoul trading on Wednesday.

By Chung Wook

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