HDC-Mirae’s 2.4 trillion won bid for Asiana gets nod
The board of Kumho Industrial, which created the airline in 1988, chose the joint bid over two others by Aekyung Group, the cosmetics giant that owns budget airline Jeju Air, and the Korea Corporate Governance Improvement Fund (KCGI), an activist investment fund that is also the second-largest shareholder of Korean Air, the country’s largest airline.
Kumho Industrial has put its 31.05 percent stake in Asiana up for sale under pressure from creditors.
The choice was made less than a week after bids were accepted last Thursday.
“Among the three consortia that participated in the final bidding for Asiana Airlines, the HDC-Mirae Asset consortium was chosen as it was considered the most appropriate candidate to normalize Asiana Airlines’ management and secure the airline’s competitiveness over the long run,” said a Kumho Industrial official.
Selling the stake will help Kumho Industrial improve its finances, the official said, including reducing its debt, and allow it to invest in new businesses.
It was reported that the HDC Hyundai Development-Mirae Asset Daewoo consortium offered the highest bid of around 2.4 to 2.5 trillion won ($2.06 to $2.15 billion) while the other two bids were around 1.5 trillion won.
The sale also includes six affiliates of the airline including budget airlines Air Busan, which Asiana Airlines owns a 44.2 percent stake in, and Air Seoul, which it owns completely.
“If the HDC Hyundai Development consortium successfully acquires all airlines under Asiana Airlines, it is expected to take advantage and aggressively compete in the market,” said Jade Lee, service and payment analyst at Euromonitor International Korea. “In addition, it is expected to have great synergy with the hotel business and duty free business that Hyundai Development has been already operating.”
The acquisition is attracting particular interest because it would represent the first time a Hyundai Group company entered the airline business.
HDC Hyundai Development Company Chairman Chung Mong-gyu is the nephew of Hyundai Group founder Chung Ju-yung. Chung Mong-gyu’s father Chung Se-yung, nicknamed Pony Chung, used to head Hyundai Motor.
On Tuesday, Chung Mong-gyu said he felt a heavy responsibility acquiring the country’s second-largest airline.
“[The decision] is the result of a strategic judgment that the airline industry, which is a national key industry, meets with HDC Group’s sustainability goals,” Chung said during a press conference.
“The acquisition will serve as an opportunity for HDC Group to leap into not only the airline industry but also emerge as a mobility business.”
The airline acquisition is expected to create synergy with HDC Hyundai Development Company’s other businesses including hotels as well as its duty free business, which the company entered in 2015 by partnering with Samsung Group’s Hotel Shilla.
Analysts estimate that HDC Hyundai Development will cover around 1.7 trillion won of the investment, while the brokerage group Mirae Asset Daewoo will cover the remaining roughly 700 billion won.
BY LEE HO-JEONG [firstname.lastname@example.org]