NK Corporation Announces Spin-Off of Its Defense Equipment Business

• Aims to strengthen business competitiveness and establish a responsible management structure through greater specialization

NK Corporation announced on February 26, 2025 that it had decided to spin off its Special Equipment Business Division, which specializes in the manufacture of defense equipment and components, and establish a new subsidiary, NK ADAMANT.

The spin-off was a strategic decision aimed at enhancing specialization and establishing a responsible management structure, with the separation scheduled to be completed on May 1, 2025.

Explaining the purpose of the spin-off, the company stated, "The separation is intended to allow the business division to operate independently and focus on its core business, thereby strengthening its competitiveness. By concentrating capabilities in specialized areas, the company also aims to improve management efficiency through the diversification of business risks and enhanced specialization."

The transaction will be carried out as a physical division under the Korean Commercial Act, with NK Corporation continuing its existing businesses while retaining 100% ownership of the newly established subsidiary. Accordingly, there will be no change in the number of shares or ownership percentage held by the largest shareholder before and after the division, nor will the transaction have any impact on the company's consolidated financial statements.

The newly established NK ADAMANT will have paid-in capital of approximately KRW 1.1 billion and will primarily engage in the design, manufacture, and sale of defense equipment, facilities, components, and other defense products. Based on the financial position allocated to the new company through the division, NK ADAMANT will have approximately KRW 17.4 billion in total assets, KRW 5.4 billion in total liabilities, and KRW 12.0 billion in total equity. Revenue attributable to the business for the most recent fiscal year was approximately KRW 14.2 billion.

Meanwhile, a general meeting of shareholders regarding the proposed spin-off is scheduled to be held on March 27, 2025. Dissenting shareholders will be entitled to exercise appraisal rights at KRW 920 per share. The company stated that it may withdraw the proposed spin-off if the total amount required to purchase shares pursuant to the exercise of appraisal rights exceeds KRW 6.0 billion.

An industry official commented:

"As major major corporations increasingly pursue spin-offs of individual business divisions, mid-sized companies are also undertaking corporate restructuring to improve business efficiency. The defense industry, in particular, requires a high degree of specialization, and operating as an independent corporate entity can offer advantages in terms of both decision-making speed and specialized expertise."

* Source: Kim Hyung-jin, Korea Credit News (https://www.creditnews.kr) [기사원문보기] Original Article