HDC Hyundai Development Company, Air Busan Sale... "Selling is Profitable"

Analysis Suggests Sale to Meet Holding Company Requirements for Asiana Acquisition

Photo by Asia Economy DB

[Asia Economy Reporter Geum Bo-ryeong] Analysis suggests that for HDC Hyundai Development Company’s acquisition of Asiana Airlines to proceed smoothly, there will likely be a focus on selling Air Busan.

According to the financial investment industry on the 28th, even if HDC Hyundai Development Company smoothly advances the acquisition of Asiana Airlines, there remain additional hurdles for HDC to meet the requirements of a holding company.

The biggest issue lies with the subsidiaries under Asiana Airlines. To avoid violating the Monopoly Regulation and Fair Trade Act, HDC must secure 100% ownership of subsidiaries currently held at less than 100% by acquiring additional shares. Alternatively, these subsidiaries must be excluded through sales or elevated to HDC’s grandchild companies.

In this context, the possibility of selling Air Busan is gaining weight. Even when part of Kumho Asiana Group, Air Busan maintained an independent management system, not sharing business strategies with Asiana Airlines. Researcher Eom Kyung-ah of Shin Young Securities stated, "Air Busan’s ownership stake is only 44.2%. If it is difficult for Asiana Airlines to directly recover its investment in Air Busan, it would be more beneficial to sell Air Busan and retain only Air Seoul, which is a 100% subsidiary." She added, "Considering that the HDC Group is unlikely to adopt a low-price offensive business strategy, it is more probable they will sell Air Busan, which poses financial risks, rather than retain it."

The possibility of a merger between Asiana IDT and HDC I Controls also remains. Both HDC I Controls, an ICT solutions company, and Asiana IDT have overlapping business areas. There is also the possibility that HDC Hyundai Development Company will purchase shares of Asiana Saber. Asiana Saber provides computerized reservation systems for airline bookings and travel information to travel agencies, with Asiana Airlines holding an 80% stake.

HDC Hyundai Development Company’s stock price has shown no signs of recovery after hitting a 52-week low due to a large-scale capital increase. While the stock price was 30,150 won on November 13 last year, it dropped 25% over two months to 22,600 won on the 13th due to a 407.5 billion won rights offering. As of 10:30 a.m. on the same day, it was recorded at 22,650 won.

This content was produced with the assistance of AI translation services.