Takeover Deal Likely to Collapse
Korea Development Bank (KDB) has dismissed HDC Hyundai Development's request for another round of due diligence on Asiana Airlines and issued an ultimatum demanding that it show willingness to take over the troubled airline until Aug. 11.
As HDC Hyundai Development is unlikely to withdraw its request for due diligence and respond to the bank’s demand positively, the company’s takeover of the airline is likely to fall through, many experts say.
“HDC Hyundai Development's demand for another round of due diligence is unacceptable in light of the seven weeks of due diligence and six months of scrutiny into Asiana Airlines by the company’s transition team. HDC’s demand is excessive and goes beyond the M&A norms”, said Choi Dae-hyun, vice president of KDB, in an online news conference on Aug. 3.
"If HDC Hyundai Development really intends to take over Asiana Airlines, we can review the changes in the business environment caused by COVID-19 and measures to improve Asiana Airlines’ financial structure," Choi added. As proof of HDC Hyundai Development’s willingness to take over the ailing airline, Choi mentioned a capital increase and making an additional down payment. "We demanded that HDC Hyundai Development take an action by Aug. 11 and if there is no action by then, we will be able to notify the termination of the contract on Aug. 12," Choi said. "If there is no progress based on HDC Hyundai Development’s sincerity, the contract will be inevitably canceled."
Lee Dong-gull, chairman of KDB, did not hide his discomfort over HDC Hyundai Development. "If the contract is canceled, all legal responsibility will fall on HDC Hyundai Development," Lee said. "Many of the documents and press releases from HDC Hyundai Development were groundless or not true. HDC Hyundai Development should bear responsibility for its decision. I do not expect that HDC Hyundai Development will file a lawsuit to get back the down payment."