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Korean Air-Asiana deal shows domestic M&A alive and well

Despite Covid, M&A can still be done at scale within countries, even in the stricken aviation sector – though it helps to have a powerful force such as Korea Development Bank behind the scenes.


The proposed merger of Korean Air and Asiana Airlines has some interesting sub-plots to it.

One is the relative buoyancy of domestic M&A at a time when cross-border deals are still logistically almost impossible. Another is the enduring power of Korea Development Bank (KDB) as a powerbroker. A third: Credit Suisse’s ability to hang on to a South Korean mandate even when a deal appears stricken.

A year ago, Euromoney reported on the proposed sale of Asiana by Kumho Industrial, its largest shareholder, to a consortium led by Hyundai Development Company (HDC).

That was a deal pretty rich in sub-plots itself, such as the emotional resonance of the airline’s connection to Gwangju, the city that suffered most after South Korea’s coup d’état in 1979, and the presence of a Gwangju native in the buyer syndicate.

However, the deal never got over the line, despite agreements having been signed on December 27, 2019.

Covid-19 clearly had an impact, prompting HDC to seek 12 weeks of additional due diligence. Eventually, the government and KDB – the main creditor bank to the troubled Kumho conglomerate – lost confidence that the deal would ever go ahead and instructed Asiana and Kumho to terminate the agreement on September 11.


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