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Korea Inc. tries to guess who will bid for Asiana

Apr 23,2019
The big corporate guessing game in Korea Inc. these days: Who might end up buying Asiana Airlines?

Since Kumho Industrial announced it would sell the crown jewel of its corporate empire last week, not a single company has publicly admitted to coveting Asiana Airlines.

But rumors are flying ahead of the upcoming signing of a memorandum of understanding between Korea Development Bank (KDB) and Kumho Industrial to sell it. KDB is the main creditor of the Kumho Asiana Group.

According to IBK Securities last week, Asiana could fetch between 1.5 trillion won ($1.3 billion) and 2 trillion won - which narrows the field of potential buyers.

SK Group was immediately identified as a possible buyer, especially considering its recruitment a year ago of former Jeju Air CEO Choi Kyu-nam to its Supex Council, SK’s central decision-making body.

Now, Hanwha Group is considered a strong contender - especially after it bailed out of a competition to buy Lotte Card.

Lotte Group is known to have demanded 1.5 trillion won for Lotte Card, and bidders are said to have submitted bids of around 1 trillion won, according to a report from Seoul Economic Daily.

“The decision not to take part in the bidding for Lotte Card was made [following discussions with Hanwha] affiliates,” said a source from Hanwha. “We are not reviewing acquiring Asiana Airlines at this point.”

But industry insiders aren’t discounting that possibility.

Acquiring Lotte Card would have been a canny move on Hanwha’s part to strengthen the link among its existing affiliates like Hanwha Life, Hanwha Investment & Securities and Hanwha General Insurance.

“There must be a reason Hanwha gave up at the last minute on Lotte Card, which it had been planning for since late last year,” said a source.

Hanwha is already involved in the airline business. The group develops and manufactures aircraft engines through subsidiary Hanwha Aerospace.

CJ Group’s reorganization of some key affiliates is seen as evidence that it may bid for Asiana. In February 2018, CJ sold CJ HealthCare to Kolmar Korea for 300 billion won. CJ also decided to sell CJ Hello, a cable TV operator, to mobile operator LG U+.

The price it gets for CJ Hello will be between 800 billion won and 1 trillion won, according to market estimates. CJ Logistics’ acquisition of eight logistics firms in the United States and China over the past five years is also seen as part of the puzzle. Logistics and airlines could go together.

For SK Group, the Fair Trade Act may stand in the way of acquiring Asiana Airlines.

If SK takes part in the bidding, SK Hynix, a subsidiary of SK Telecom, appears the likely bidder. As of late last year, SK Hynix had 8.3 trillion won in cashable assets, according to a source in the company.

But according to the Fair Trade Act, a subsidiary of a group like SK Hynix would be required to purchase all shares of Asiana, not just the 33.47 percent stake offered by Kumho Industrial.

“It would be easier for SK Telecom to acquire the airline [because it wouldn’t have to purchase the full 100 percent stake],” said a source from SK Hynix. “But [that might be unlikely considering] the cashable assets SK Telecom holds.”

BY KANG KI-HEON, JIN MIN-JI [jin.minji@joongang.co.kr]