[Photo by Han Joo-hyung]

The Chung family behind Korea’s once-mightiest conglomerate Hyundai that broke down to several business groups has reunited to back HDC Hyundai Development Co.’s acquisition of Korea’s second largest full-service carrier Asiana Airlines that can add aviation to the supermarket list of businesses under Hyundai name.

According to sources on Tuesday, HDC Hyundai Development is mulling to sell 500 billion won ($419 million) in new shares to Hyundai and Chung family companies to raise capital for the planned acquisition of Asiana Airlines. Such financial partnership is expected to help the company groom the airline as Asia’s No. 1 player through enhanced strategic partnership with its sibling Hyundai companies, expected industry observers.

HDC Group is a spin-off from Korea’s famous Hyundai and Chung family group that has expanded to financial and resort business under Chung Mong-gyu, chairman of its holding company HDC Holdings and cousin of Hyundai Motor Group Chair Chung Mong-koo and Hyundai Heavy Industries Group Chair Chung Mong-joon.

Market analysts say such a financial partnership among the cousins would result in a business win-win to everyone who participates in HDC Hyundai Development’s upcoming rights offering.

Of anticipated non-financial synergies among Hyundai-affiliated companies through the financial cooperation, Hyundai Department Store Group would contribute to in-flight meal catering service with its own catering service business, while Hyundai Oilbank under Hyundai Heavy Industries Co. could do take part in jet fuel supply. Asiana Airlines also would enjoy stable business trip demand from Hyundai and family group companies’ employees and air cargo deliveries from the sibling units, industry observers said.

Industry insiders expect other conglomerate names with heavy dependence on aviation and logistics businesses also would likely join the rights offering for strategic partnership with the new owner of the Korean flag carrier.

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HDC Group earlier has successfully made a partnership with Hotel Shilla, a unit of Korea’s largest conglomerate Samsung Group, for its entry into the duty-free business. The two companies now jointly run the duty-free business through the HDC-Shilla joint-venture.

HDC Group reportedly is aiming to finalize the acquisition deal and plans to keep Asiana’s budget carrier and support units under the full-service parent on expectations for further synergy in the group – HDC I-Controls for system integration work and HDC I-Service for real estate management and maintenance, repair and overhaul (MRO) business.

HDC Hyundai Development needs to raise extra capital to afford all of them.

HDC Hyundai Development as the preferred bidder has to sign an agreement with the seller Kumho Industrial until Thursday. The HDC Hyundai Development-Mirae Asset consortium won the tender by offering the highest bid of over 2.4 trillion won. But it is known that the seller and the buyer have not reached an agreement over a premium for existing shares of Asiana Airlines.

Despite the price difference over the premium, creditors and market analysts expect Kumho and the HDC Hyundai Development consortium would iron out the differences in the end and reach an agreement over the acquisition deal before the end of this year.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]