Jeju Air (7C, Jeju) has postponed the signing of an agreement to acquire Eastar Jet (ZE, Seoul Gimpo) until the end of January 2020, as it needs more time to conduct a due diligence on the smaller LCC, it announced in a corporate disclosure revision dated December 30, 2019.
Jeju Air had originally set a deadline of the end of 2019 to sign the share purchase agreement with Eastar Holdings, in which it would take a 51.17% stake in its subsidiary for KRW69.5 billion won (USD59 million). The stock sale agreement will now be concluded in 2020, the revision said.
“The company entered into due diligence of Eastar Jet and had planned to complete it by January 9. But the process will be extended to the end of January, along with the schedule for the signing,” a company spokesman confirmed to Korea's Yonhap News Agency.
Another Jeju Air official explained to the newspaper Business Post on January 3: “The acquisition process of Eastar was not a public auction, so there was no preliminary due diligence, which means it will take time to examine the financial condition [of Eastar Jet].”
On January 6, Yang Ji-hwan, a researcher at Daishin Securities, assured to Business Post: “Jeju Air will improve its earnings through the acquisition of Eastar by realising economies of scale and route efficiency in the long term.”
