Korean holding company AK Holdings revealed on December 18 that its low-cost carrier unit Jeju Air (7C, Jeju) had signed a Memorandum of Understanding (MOU) to buy a 51.17% stake in fellow South Korean budget airline Eastar Jet (ZE, Seoul Gimpo).
Jeju Air said in a stock market filing that it expected to acquire newly issued shares in Eastar Jet, which is currently unlisted, and sign a final deal by December 31. The transaction is estimated to be valued at around KRW69.5 billion won (USD59.55 million).
The MOU said that Jeju Air would acquire 4,971,000 shares of Eastar Jet common stock, or 51.17% of the company. The schedule is subject to change in the process of due diligence, it added.
AK Holdings holds a 56.9% stake in Jeju Air. Another AK subsidiary, Aekyung Group, failed last month in its bid to buy a controlling 31.05% stake in Asiana Airlines (OZ, Seoul Incheon), losing to South Korean real estate and construction giant Hyundai Development Co and brokerage Mirae Asset Daewoo.
In October, Eastar Jet denied reports in the Korean media claiming it had initiated the process of selling off a large chunk of equity to local investors. The LCC has reportedly suffered losses incurred as a result of the B737-8 grounding and the downsizing of the Japanese market due to souring Korea-Japanese relations.
