Jeju Air Terminates Acquisition Contract with Eastar Jet... "Uncertainty Was Significant" (Update)

"M&A Fruits Not Realized, Regrettable"

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Jeju Air has terminated the stock purchase agreement (SPA) with Eastar Holdings for Eastar Air. As a result, Jeju Air's acquisition and merger (M&A) of Eastar Air, which had been ongoing for over seven months, has been finally canceled.

Jeju Air announced on the 23rd that it is terminating the SPA signed with Eastar Holdings last March due to a significant breach of representations and warranties that was not remedied and the expiration of the transaction closing period.

Jeju Air had previously exchanged a memorandum of understanding with Eastar Holdings on December 18 last year for the acquisition of Eastar Air citing "economies of scale," and signed the SPA in March. However, after the COVID-19 pandemic, various unpaid debts emerged as issues, leading Jeju Air to reconsider the acquisition.

Jeju Air stated, "Despite the government's active support and mediation efforts, we judged that the uncertainties Jeju Air would have to bear if the acquisition proceeded under the current circumstances are too great, and concerns about damages to stakeholders including shareholders are also significant. We regret that this M&A did not come to fruition."

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