Asiana Airlines agreement finally signed

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Asiana Airlines agreement finally signed

HDC Hyundai Development and Mirae Asset Daewoo have formally acquired Asiana Airlines.

The consortium signed the stock purchase agreement with Kumho Industrial and Asiana at their board meetings, which were held Friday. The acquisition deal was inked eight months after Kumho Industrial’s stake in the airline was put up for sale.

The total acquisition price came in around 2.5 trillion won ($2.24 billion).

The consortium agreed to pay 322.8 billion won in purchasing the 30.77 percent Kumho Industrial holds in the country’s second-largest airline. The per share price is 4,700 won. Additional funds will be committed via new shares and will go toward improving the financial condition of the airline.

Asiana’s total assets will rise to over 3 trillion won from 1.1 trillion won as of the third quarter.

Asiana’s six subsidiaries, which include budget airlines Air Busan and Air Seoul and ICT service provider Asiana IDT, are included in the deal.

HDC, which spent 2.1 trillion won for the acquisition, will own around 61.5 percent of Asiana, while Mirae Asset Daewoo, which invested 489.9 billion won, will hold around 15 percent.

The deadline to complete the acquisition was delayed due to a disagreement over the price. A compensation limit was also an issue, with the acquirer citing the possibility of having to pay a Fair Trade Commission fine as a result of a pre-acquisition violation related to ties with an in-flight catering company.

They agreed to a compensation limit equal to 9.9 percent of the old share price, which is around 31.7 billion won.

“We will immediately embark on the acquisition process to quickly stabilize Asiana Airlines and to become an airline that prioritizes safety,” said HDC Chairman Chung Mong-gyu in a statement on Friday. “We’ll also seek ways to create synergy effects with the HDC Group in diverse fields of business.”

Chung last month said at a press event that he believes acquiring Asiana will function as a stepping stone for HDC to become a mobility group.

HDC said the acquisition process will be finalized by April.

HDC Group, which owns Hotel HDC and HDC Shilla Duty Free, will have 20 trillion won of assets post-acquisition, up from the current 10.6 trillion won.

The HDC-Mirae consortium was selected as the preferred bidder in November, winning out over a consortium led by Aekyung Group, a cosmetics conglomerate that operates budget airline Jeju Air, and the Korea Corporate Governance Improvement fund.

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