Korean Air applied for a business combination review for the acquisition of Asiana Airlines. In fact, it is the final procedure, so if the review is completed smoothly, the takeover process is expected to accelerate.
According to industry sources on the 14th, Korean Air submitted a business combination report to more than 10 competition authorities around the world, including the Fair Trade Commission, the Antitrust Division of the US Department of Justice, and the European Competition Authority (ECA) of the European Union (EU).
The FTC and overseas authorities are planning to confirm the element of monopoly through the business combination report submitted by Korean Air. The FTC is obligated to report a business combination if the acquisition company (reporting company) has assets or sales of 300 billion won or more, and the acquisition target company is 30 billion won or more.
In the industry, the two companies are expected to pass the joint examination. The domestic market share of the two major airlines is overwhelming, but in the case of airline mergers and acquisitions (M&A), it is common to determine whether they have monopoly by route rather than share.
In addition, the FTC may decide to approve a business combination with a company that cannot be rehabilitated by applying an exception, even if there is a great concern about restricting competition. It is said that there is a possibility that it would be more desirable for other companies to take over and operate it despite concerns of deepening monopoly rather than Asiana Airlines exiting the market. In April of last year, the Fair Trade Commission approved this point when reporting a business combination between Jeju Air and Eastar Jet.
Considering that overseas competition authorities have never refused to join the airline, it is expected that M&A between the two companies will not be a problem. A Korean Air official said, “It is difficult to predict the total time required because each country’s screening procedures are different, but we will try to get approval as soon as possible.”
When this process is completed, the integration of the two companies is expected to accelerate further. Korean Air voted for a paid-in capital increase to raise funds for the acquisition of Asiana Airlines at the shareholders’ meeting on the 6th, and the acquisition committee recently started due diligence on Asiana Airlines. It plans to establish an integrated strategy (PMI) after the acquisition by mid-March.
Reporter Jungwoo Lee email@example.com
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