Korean Air acquires Asiana and becomes 10th largest airline in the world

Korean Air Lines Co., South Korea’s largest carrier, said on Monday it would buy small local rival Asiana Airlines Inc. in a deal valued at 1.8 trillion won (1.62 billion won). dollars) that would create the world’s 10th largest fleet airline.

Korean Air plans to buy new shares worth 1.5 trillion won that will be sold by Asiana and purchase bonds that will be introduced by the smaller carrier, the company said in a regulatory filing.

Korean Air, currently 18th in the world, will acquire a 30.77% stake in Asiana from creditors of the indebted carrier run by the Development Bank of Korea (KDB).

The state lender plans to invest 500 billion won in shares to be issued by Hanjin KAL and 300 billion won in the company’s convertible bonds.

Hanjin KAL, the holding company of airline conglomerate Hanjin Group, is expected to submit a letter of intent to KDB earlier this week to close the deal.

In its larger acquisition plan, Korean Air will gradually integrate three low-cost carriers – Jin Air Co. of Korean Air and Air Busan Co. and Air Seoul Inc. of Asiana – after completing the acquisition of Asiana.

Asiana’s majority stake is held by Kumho Industrial Co., a subsidiary of airline-petrochemical conglomerate Kumho Asiana Group.

In September, Asiana’s creditors – KDB and the Export-Import Bank of Korea – decided to end an extended deal to sell Asiana to a consortium led by HDC Hyundai Development Co. over differences over terms of the agreement as part of the extension of the agreement. Covid pandemic19.

The HDC-led consortium initially signed the deal to acquire Asiana from Kumho Industrial, along with new issuer Asiana shares and the carrier’s six subsidiaries, for 2.5 trillion won.

But HDC subsequently demanded a renegotiation with Kumho and the creditors on the terms and another round of due diligence on Asiana to reflect the impact of the pandemic on the airline industry.

The claim was rejected by the creditors. (Yonhap)