Kumho Asiana all-clear to buy Korea Express
The Korean Fair Trade Commission (FTC) has approved Kumho Asiana Group’s acquisition of Korea Express Co., paving the way for the conglomerate to expand its logistics business in the parcel and express market.
The group’s two affiliates – Asiana Airlines Inc. and Daewoo Engineering & Construction Co. – were chosen as preferred bidders for the purchase of 24 million new shares of Korea Express. The 24 million shares are equivalent to a 60 pct stake in the company. The price is estimated at more than USD 4 billion.
Now that the takeover has been officially given the green light, Kumho Asiana Group will negotiate with the insolvency court on the final acquisition price by next month, the Korea Herald newspaper reported.
Korea Express has been under the control of the insolvency court since November 2001, after it failed to repay debts owed by its parent company Dong-Ah Construction Industrial Co., which collapsed under mounting debt in the wake of the 1997-98 Asian financial crisis.
But despite financial woes, the company has been aggressively expanding its business in recent years, thanks to the fast-growing online shopping industry.
Korea Express became the country’s top delivery firm last year with estimated 122 million deliveries, topping its competitors Hyundai Logistics with 120 million, CJ GLS Co. with 114 million, and Hanjin Corp with 100 million, the newspaper also reported. Korea Express hopes that delivery volume this year will rise to 200 million on synergies from the acquisition.
Since taking office in July 2005, Korea Express CEO Lee Kook-dong has spearheaded a total of 420 billion won (USD 450 million) in corporate investment under the court receivership. About half of the money was spent on increasing delivery capacity, industry insiders said.
In order to further boost its capacity, Kumho Asiana plans to construct a second logistics terminal in Daejeon, south of Seoul, to sort an additional 50 million packages a day and build another terminal in Gasangdong, a southwestern district of Seoul.
