December 22, 2024

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A consortium led by Hyundai Development Co., has been selected as the preferred bidder for purchasing majority stake in Asiana Airlines, its largest shareholder Kumho Industrial said Nov. 12.

The consortium, comprising real estate developer and investment bank Mirae Asset Daewoo, is inching closer to acquire newly-issued shares plus a 31.05 percent stake in Korea’s No. 2 air carrier owned by Kumho Industrial, for some 2.4 trillion won ($2.1 billion).

The pricing apparently excludes a control premium, as the HDC-led consortium valued existing Asiana shares by Kumho lower than their market price -- estimated at some 400 billion won if combined -- according to industry sources.

An exterior view of Hyundai Development Co. headquarters in Seoul. Yonhap

Related:
Aekyung, HDC, KCGI join bid for Asiana acquisition


The HDC-led consortium beat competitors including another consortium led by Aekyung Group, which owns low-cost carrier Jeju Air. Both gained regulatory approval from the Land Ministry earlier on Nov. 12. A consortium comprising Korean private equities -- activist fund manager Korea Corporate Governance Improvement and BankerStreeet Private Equity -- stopped short of gaining the regulatory nod.

Kumho Industrial said in a regulatory filing the related parties will embark on a due diligence and talks to finalize closing conditions. The firm will announce an update on stake sale once confirmed.

To abide by the Fair Trade Act, Hyundai Development’s parent firm HDC Holdings is faced with options with regards to outstanding shares of Asiana Airlines’ subsidiaries, including Asiana IDT and Air Busan. HDC Group may buy all remaining shares from small shareholders or carry out restructuring to place Asiana units under Hyundai Development’s arms as direct subsidiaries.

Asiana’s share price soared 12.9 percent in Nov. 12 closing. HDC Holdings rose 7.3 percent and Hyundai Development jumped 2.1 percent.

This comes seven months after Kumho first announced its plan to sell off Asiana to address the group’s financial woes. The group got the air carrier license in 1988 and launched the company the same year.

By Son Ji-hyoung (consnow@heraldcorp.com)