Bid for Korea Aerospace stake crashes and burnsThe Korea Finance Corporation (KoFC) said yesterday it failed to auction off a controlling stake worth around 1.4 trillion won ($1.2 billion) in aircraft maker Korea Aerospace Industries (KAI).
The state-run lender said that only Korean Air, Korea’s largest carrier, submitted a preliminary bid to buy the 41.75 percent stake in KAI by yesterday, rendering the bidding process invalid due to the lack of competition.
KoFC said it will hold talks with Hyundai Motor and precision machinery maker Samsung Techwin, both major shareholders of KAI, to try to work out details on a future course of action, including whether to put up a public notice of bidding again.
KoFC is in charge of the stake sale as the biggest shareholder of KAI, with a 26.41 percent share. The deal price is expected to be around 1.4 trillion won, including a premium for management control of KAI.
A KoFC official said that consultations will begin next week. He did not give further details and asked not to be identified, citing company policy.
The development dealt a setback to KAI’s major shareholders, who had hoped to wrap up the sale by the end of this year after completing final bidding in October.
Korean Air has said its proposed takeover could create a synergy effect as the flagship carrier seeks to eventually build its own airplanes as part of its growth strategy.
However, Cho Yang-ho, chairman of Hanjin Group, recently said his group will not take over KAI if the deal price is set based on KAI’s recent share prices, noting that KAI’s price is overvalued, according to Korean Air.
Hanjin is the country’s 10th-biggest business group, with Korean Air under its wing. Shares of KAI shed 0.96 percent to close at 25,750 won on the Seoul bourse.
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