The sale process has begun for South Korea's second-largest full-service carrier Asiana Airlines Inc.
Kumho Industrial and sales adviser Credit Suisse Securities issued a public notice on July 25 to sell 68,688,063 controlling shares of Asiana Airlines, equivalent to a 31.0 percent stake, held by Kumho Industrial, plus new shares to be issued by the carrier.
Kumho Industrial Co. will sell Asiana Airlines and its two budget carriers – Air Busan Co. and Air Seoul Inc. – in a packaged deal. Market experts expect that the total price tag for the deal can reach up to 2 trillion won (US$1.69 billion).
Potential buyers include the country’s major business groups, such as SK, GS and Hanwha as well as Aekyung Group which has already shown its intention of the acquisition.
The preliminary bidding process will run through September. When potential buyers express their intention to take part in the tender, sales manager Credit Suisse Securities will provide documents for the sale process, including an investment handbook and a preliminary bidding process handbook.
Kumho Industrial and creditors will finalize a shortlist of potential buyers and conduct a due diligence at the end of September. They will also proceed with the main bidding and select a preferred bidder after October. If the process goes as planned, the sales process will be completed this year.
Kumho Industrial and creditors made it clear that the buyer should purchase Asiana and its two budget carriers together. However, the question is whether the tender will attract qualified buyers. Potential buyers are expected to try to read each other’s intention for a while.
Currently, only Aekyung Group, which owns low-cost carrier Jeju Air Co., has publicly disclosed its intention to acquire Asiana Airlines. SK, GS and Hanwha groups said they were not interested in the deal several times, but they are still considered as potential buyers.
The future buyer will take over the Asiana Airline shares owned by Kumho Industrial and acquire new shares issued by the carrier through a third party allocation. When considering the fact that the share price for Asiana Airlines closed at 6,520 won (US$5.52) on July 24, it will take a minimum of about 450 billion won (US$380.87 million) to acquire the stake owned by Kumho Industrial. If the cost for acquiring new shares and paying a control premium is added, the acquisition price can reach over 1 trillion won (US$846.38 million) and even up to 2 trillion won (US$1.69 billion), according to market experts.