December 19, 2019 12:17
Budget carrier Jeju Air will buy out rival Eastar Jet in the first case of a Korean airline acquiring a rival.
Jeju Air is the largest Korean low-cost airline, while Eastar Jet ranks fifth.
Jeju Air said Wednesday that its board of directors signed off on a stock sale agreement to gain management control of Eastar. Jeju will acquire a 51.17-percent stake in Eastar by buying 4.97 million shares for W69.5 billion (US$1=W1,168).
It will first pay a deposit of W11.5 billion and the remainder after a Fair Trade Commission review is completed.
Eastar Jet is currently in a state of capital impairment, where its assets are worth less than its total listed stock value. This means Jeju will review the assets in more detail before deciding whether to acquire more shares or take out loans to infuse fresh blood into Eastar.
Eastar is expected to keep its name and become a subsidiary.
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