Korean Air seeking to buy Asiana Airlines
Hanjin Kal shareholder KCGI opposes possible merger
By Shin Ji-hyePublished : Nov. 13, 2020 - 15:36
Korean Air is seeking to acquire Asiana Airlines with the support of the Korea Development Bank, according to the airline industry on Friday.
Industry sources said Asiana Airlines’ creditor KDB is considering mergers and acquisitions of the two nation’s largest airlines in a way to support Hanjin Group, which owns Korean Air. The most likely option is that the KDB invests in Hanjin Kal, the holding company of Hanjin Group, through a paid-in capital increase method allocated to a third party, and Hanjin Kal buys a 30.77 percent stake in Asiana Airlines.
The industry expects that Hanjin Group will send a letter of intent to Asiana Airlines next week.
The KDB said, “We are reviewing it among various options, but nothing has been confirmed.”
Asiana Airlines is under creditor control following the failure of the acquisition talks with HDC Hyundai Development. Asiana has already used up 3.3 trillion won ($2.9 billion) supported by state-run banks and recently received additional support of 240 billion won from the government.
The possible merger between the nation’s two largest airlines will, however, face antitrust issues. If Korean Air acquires Asiana, it is expected to hold more than 75 percent of the market share on passenger routes to the Americas and major cargo routes.
Later in the day, private equity fund KCGI, a shareholder of Hanjin Kal, released a statement opposing the merger plan.
“It is reasonable to suspect that KDB’s consideration of acquiring Asiana Airlines by funding Hanjin Kal is a measure to preserve the position of the current management, ignoring the rights of other shareholders.”
It added that, “The purchase of Asiana Airlines, which is facing its worst financial crisis, without any specific concerns about industrial synergy, could lead to damages for customers. Therefore, it is necessary to go through a sufficient review and transparent consultation process.”
Currently, Hanjin Kal is owned by a three-way alliance led by KCGI -- alongside Bando Engineering & Construction, and Cho Hyun-ah -- which has a 46.71 percent stake and Hanjin Chairman Cho Won-tae, who has a 41.4 percent stake.
By Shin Ji-hye (shinjh@heraldcorp.com)
Industry sources said Asiana Airlines’ creditor KDB is considering mergers and acquisitions of the two nation’s largest airlines in a way to support Hanjin Group, which owns Korean Air. The most likely option is that the KDB invests in Hanjin Kal, the holding company of Hanjin Group, through a paid-in capital increase method allocated to a third party, and Hanjin Kal buys a 30.77 percent stake in Asiana Airlines.
The industry expects that Hanjin Group will send a letter of intent to Asiana Airlines next week.
The KDB said, “We are reviewing it among various options, but nothing has been confirmed.”
Asiana Airlines is under creditor control following the failure of the acquisition talks with HDC Hyundai Development. Asiana has already used up 3.3 trillion won ($2.9 billion) supported by state-run banks and recently received additional support of 240 billion won from the government.
The possible merger between the nation’s two largest airlines will, however, face antitrust issues. If Korean Air acquires Asiana, it is expected to hold more than 75 percent of the market share on passenger routes to the Americas and major cargo routes.
Later in the day, private equity fund KCGI, a shareholder of Hanjin Kal, released a statement opposing the merger plan.
“It is reasonable to suspect that KDB’s consideration of acquiring Asiana Airlines by funding Hanjin Kal is a measure to preserve the position of the current management, ignoring the rights of other shareholders.”
It added that, “The purchase of Asiana Airlines, which is facing its worst financial crisis, without any specific concerns about industrial synergy, could lead to damages for customers. Therefore, it is necessary to go through a sufficient review and transparent consultation process.”
Currently, Hanjin Kal is owned by a three-way alliance led by KCGI -- alongside Bando Engineering & Construction, and Cho Hyun-ah -- which has a 46.71 percent stake and Hanjin Chairman Cho Won-tae, who has a 41.4 percent stake.
By Shin Ji-hye (shinjh@heraldcorp.com)
