A proposal to sell a 41.75% stake in Korea Aerospace Industries (KAI), South Korea’s sole aircraft manufacturer, has collapsed for the second time after Korean Air Lines pulled out from the final round of bidding, claiming that KAI’s price is overvalued.
Hyundai Heavy Industries (HHI) emerged as the sole preliminary bidder during the first round of bids, but national-security law requires the submission of two or more bids for the auction to proceed.
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The 41.75% stake is estimated to be KRW1.13tn ($1.02bn).
The failure of Korean Air Lines’ bid was unexpected as it had shown a keen interest in buying a stake in the aircraft manufacturing company as part of its efforts to expand presence in the aerospace industry.
Korean Air Lines already manufactures parts for various aircraft and offers maintenance, repair, and operations (MRO) services for commercial and military planes.
Korea Finance, a state-run financial institution in charge of the sale process, stated that the sale process has become invalid now and shareholders will decide a course of action on how to handle the sale.
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By GlobalDataHHI entered the bidding after a shareholders’ plan to sell stake in KAI failed in August due to lack of bidders and Korean Air was the sole bidder in the auction process.
KAI manufactures multi-purpose satellites, civilian and military planes such as T-50 advanced jet trainer, FA-50 light fighter, KT-1 basic trainer and sub-assemblies.
Korean Aerospace Industries was originally established as a joint venture between Samsung Aerospace, Daewoo Heavy Industries and Hyundai Space and Aircraft Company.
