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Korean Air wins shareholders' approval for Asiana deal

Jan 06, 2021 (Gmt+09:00)

Korean Air's headquarters in Seoul

Korean Air Lines Co. will proceed with its planned $1.6 billion acquisition of Asiana Airlines Inc. after winning approval from a majority of its shareholders on Jan. 6 to sell new shares to finance the purchase.

Despite the negative vote from the National Pension Service with an 8.11% stake in Korean Air, 70% of shareholders attending an extraordinary shareholders meeting approved Korean Air’s proposed change to its articles of association.

The amendment allows the airline to increase its number of outstanding shares up to 700 million from the previous 250 million to raise fresh capital.

The shares held by those attending the meeting represented 55.73% of its total shares in circulation, including the 31.13% stake controlled by Hanjin KAL and family shareholders. 

Its employee shareholders and Credit Suisse voted in favor of Korean Air's proposal. They hold a 6.39% stake and a 3.75% stake in the carrier, respectively.

On Tuesday, a committee advising on the NPS’ exercise of shareholder rights opposed Korean Air’s plan to change its articles of association aimed at facilitating its acquisition of Asiana Airlines.

Backed by the approval from shareholders, Korean Air will proceed with the sale of its new shares worth 2.5 trillion won ($2.3 billion) in March. Hanjin KAL, as the top shareholder, is planning to inject 730 billion won to buy a portion of these. The airline will also seek approval for the merger from antitrust agencies both at home and abroad.

Under the agreement announced in November, Korean Air will buy 1.5 trillion won worth of new shares in Asiana to become its largest shareholder with a 63.9% stake by the end of June 2021.

The 1.5 trillion won includes a deposit of 300 billion won paid last month. The remaining 1.2 trillion won will be paid in installments.

Korean Air’s creditor banks, including Korea Development Bank, have called on Hanjin Group, the airline’s parent group, to concentrate on completing the acquisition by June, according to industry sources.

Write to Kyung-min Kang at kkm1026@hankyung.com

Yeonhee Kim edited this article.

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