Hoban Group moves to take over as Hanjin KAL Corporation’s largest shareholder [fn Market Watch]

[Financial News] Having become Hanjin KAL Corporation’s largest shareholder, Hoban Group has filed a business combination report with the Korea Fair Trade Commission. However, KDB’s 10.58% stake in Hanjin KAL remains on the side of Walter Cho, chairman of Hanjin Group, so the control structure is not expected to change immediately.
On the 2nd, according to the investment banking (IB) industry, Hoban Group bought additional shares in Hanjin KAL through on-market purchases. It thereby edged past the approximately 20.6% stake held by Walter Cho, chairman of Hanjin Group, and persons with special ties to him. The gap between the two sides, which had narrowed to 0.42 percentage points in July, reversed in just over three months.
A senior Hoban Group official said, “It is true that we filed a business combination report with the Fair Trade Commission and are currently under review,” adding, “Becoming the largest shareholder triggered the reporting obligation. We have already acquired the stake and filed the report with the Fair Trade Commission.”
Under the Fair Trade Act, a company above a certain size that already holds at least 15% of a listed company’s shares must report a business combination if it buys more shares and becomes the largest shareholder for the first time. If shares are acquired through competitive trading on the regular market, a post-acquisition report may be filed within 30 days of the purchase. The review period is 30 days in principle and may be extended to a maximum of 90 days if necessary.
Hanjin KAL issued an explanatory disclosure on unconfirmed matters and said it would make another disclosure once the details were confirmed or by the 1st of next month.
Hoban Group became the second-largest shareholder in 2022 after buying a 13.97% stake in Hanjin KAL (9.4 million shares) from the private equity fund KCGI Asset Management for about 564 billion won. It has steadily increased its stake since then. The IB industry estimates its average purchase price at around 60,000 won per share. Given that Hanjin KAL shares were trading in the 131,500-won range at 2:20 p.m. that day, its unrealized gains are substantial.
The stated purpose of holding the stake remains “simple investment.” Hoban Group has also previously bought up its stake in LS to the 4% range and then sold all of it, leaving the market divided over the true intent behind its latest move.
Even with the change in largest shareholder, control of Hanjin KAL—which holds a 26.05% stake in Korean Air—remains in the hands of Cho’s side. The key variable is KDB’s stake.
At the end of 2020, KDB took part in a rights offering to support Korean Air’s acquisition of Asiana Airlines, acquiring 7,062,146 newly issued shares in Hanjin KAL at 70,800 won per share, for about 500 billion won. It also signed a shareholder agreement with Cho’s side at the time. The stake is estimated to be worth more than 900 billion won.
Including Delta Air Lines’ 14.90% stake, the supportive stakes on Cho’s side exceed 46%. LX Pantos, GS Retail, private equity funds affiliated with Daishin and Eugene, and Japan Airlines (JAL)—which entered into a strategic partnership with Korean Air last September and acquired a stake in Hanjin KAL—are also counted among his allies. Cho was re-elected as an inside director at the regular shareholders’ meeting in March despite opposition from the National Pension Service. Hanjin KAL’s board comprises two inside directors and seven independent directors, with no representatives from Hoban.
The key variable is what happens after the launch of the integrated Korean Air. Korean Air and Asiana Airlines will officially launch as a single airline on the 17th of next month. Once the integration is complete, the policy rationale for KDB remaining a shareholder in Hanjin KAL will weaken. A senior KDB official said only of how the stake would be handled, “I understand it will be done as fairly as possible.”

[email protected] Kang Gu-gwi Reporter