Walter Cho moves to take over JAL stake... Could Hanjin KAL’s control battle turn into an “SI alliance war”? [fn Market Watch]

[Financial News]  The shareholding contest between Walter Cho, chairman of Hanjin Group, and Hoban Group over control of Hanjin KAL Corporation appears poised to expand into a battle to line up allies. The possibility has been raised that Cho may take over the 0.48% stake in Hanjin KAL Corporation held by Japan Airlines (JAL). Observers say the contest could go beyond simply increasing personal stakes and develop into a competition in which both sides bring in strategic investors (SIs) to strengthen their control.
According to investment banking (IB) industry sources on the 3rd, the 325,000 additional Hanjin KAL Corporation shares Cho agreed to purchase in a filing the previous day match the number JAL acquired in August. On the 2nd, Cho disclosed that he had entered into a stock purchase agreement for Hanjin KAL Corporation shares at 114,000 won per share, for a total of 37.05 billion won. If the transaction closes as planned, Cho’s personal stake will rise from 5.75% to 6.23%.
JAL acquired a stake in Hanjin KAL Corporation in August and followed that with a strategic partnership with Korean Air in September. IB industry sources are watching the possibility that the transaction is a move to transfer an allied stake on Cho’s side into his personal name and directly strengthen his control. However, it has not been officially confirmed whether JAL is the actual seller.
Notably, this transaction could mark the starting point of a future battle over stakes. As Hoban Group adds to its stake in Hanjin KAL Corporation, threatening the position of largest shareholder, Cho’s side has greater incentive to rally its allies.
In particular, there is speculation that the contest between the two sides could expand beyond simple open-market share purchases into alliances with outside SIs.
Companies with shared business interests in aviation, logistics and shipping could emerge as potential allies, analysts say. However, no specific plans for SI participation or joint share purchases have been officially announced to date.
The price of JAL’s stake has also drawn attention. JAL’s average purchase price in August was reportedly about 126,000 won per share, about 9.5% higher than the price Cho is set to pay. If the transaction goes through at the planned price, JAL would incur a loss of about 3.9 billion won based solely on the purchase and sale prices. The final profit or loss could vary depending on the actual terms of the transaction and whether there are separate agreements.
Meanwhile, IB industry sources say that the key to the future battle over stakes in Hanjin KAL Corporation will depend not only on the two sides’ financial resources but also on how many supportive shareholders they can secure.
Even if Cho’s acquisition of JAL’s stake goes through, its impact on the overall balance of voting rights could be limited if it amounts only to a transfer of an existing allied stake.
A source in the IB industry said, “If the battle over stakes in Hanjin KAL Corporation drags on, it could become increasingly burdensome for both sides to increase their stakes on their own,” adding, “Securing strategic investors who share business interests as allies could become a new variable in the contest for control.”


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