KAI shareholders plan stake sale to international buyer

Singapore
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The shareholders of Korea Aerospace Industries (KAI) could sell a major stake in the firm in an effort to enhance its global competitiveness.

"The offer is an agreement between the major shareholders," says KAI in an email to Flightglobal. "KAI is not aware of the exact details. It is believed the stake is being offered for financially strong companies in order to provide a boost for the aviation industry in this region."

KAI's major shareholders hold a total of 56.4% in the company. They are government-owned Korea Finance Corp (26.4%), Samsung Techwin (10%), Hyundai Motor (10%) and two units of industrial conglomerate Doosan, DIP Holdings (5%) and Odin Holdings (5%).

Of the remaining 43.6%, institutional and individual investors own 34.6% and KAI employees own 9%.

An unsourced media report from South Korea said that up to 40% of KAI's share capital could be sold, a figure KAI declined to comment on. It also would not speculate on the value of the possible stake.

"The value can only be known when a value-estimating agency is selected to conduct site inspections," says KAI. "The value-estimating agency will be selected by the leading agency for the M&A [mergers and acquisitions]."

It adds that the schedule and a agency for the stake sale have yet to be determined.

"[Korea Finance Corp] mentioned that they have a plan to select the leading company for the M&A by early May, and to finalise the selling procedure for KAI within this year."

Another unsourced media report suggested that Boeing could be interested.

In response to an email from Flightglobal, Boeing Defense, Space & Security says it views M&A as a strategic option, but that "we do not comment on rumours of potential mergers or acquisitions".

KAI has worked closely with both Boeing and its rival Lockheed Martin on a range of programmes. KAI is a key supplier for a range of Boeing civil and military aircraft. It partnered with Lockheed Martin to produce the T-50 Golden Eagle, and produced the F-16 under licence for the Republic of Korea Air Force.

The company also produces the wing ribs for the Airbus A350. In March it announced a $1.2 billion deal to produce wing parts for the A320 from 2014 to 2025.

"We are at the beginning stage for selling a stake, the procedure for which will be fair and impartial," says KAI. "It is not clear whether a single firm or a group of buyers would buy the stakes."

In 2011, KAI earned a net profit of $63 million on revenues of $1.1 billion.