KAI stake bid deadline pushed back to 17 December

Singapore
Source:
This story is sourced from Pro
See more Pro news »

The final bidding deadline for a 41.75% stake in Korea Aerospace Industries (KAI) has been pushed back to 17 December.

In a statement, the Korea Finance Corporation, which owns 11.4% of KAI, said the deadline was extended because a request for extension was made.

Korean Air and Hyundai Heavy Industries are interested in the stake. Media reports suggest they requested the extension because of difficulties performing due diligence, apparently related to opposition from KAI's unions for the proposed deal.

This is the second time the stake has gone on the block in 2012.The first sale fell through after only Korean Air expressed interest - a sole bidder situation is in contravention of South Korean law. On 27 September, however, Hyundai Heavy Industries submitted a preliminary bid.

Industry sources in South Korea say Korean Air, which has an extensive aerostructures and MRO business, has long been interested in gaining control over KAI. A Korean Air takeover, however, would likely result in job losses at KAI - and at Korean Air, to a lesser extent - because of redundancy between the two firms.

In addition to its airline operations, Korean Air's aerospace division produces components for a number of major commercial aircraft programmes and provides MRO services for both commercial and military aircraft.

Korean Air hopes to play an increasingly larger role in producing its own aircraft and has worked on several unmanned air vehicles.

The acquisition of KAI, which produces the T-50 advanced jet trainer, FA-50 light fighter, KT-1 basic trainer and sub-assemblies for a number of other aircraft types, would make Korean Air the dominant player in South Korea's aerospace sector.

KAI announced on 31 July that six of its shareholders are offering to sell a combined 41.75% stake in the company.