The acquisition of Asiana underlines Chung's drive to diversify the group's business portfolio. "The acquisition of Asiana Airlines will serve as an opportunity to take a step forward not only in the aviation industry but also in the mobility group," he told reporters on Tuesday.
Mobility has been a concept that the HDC chairman has perceived for a long time since he took his hands off Hyundai Motor and turned over its leadership to Chung Mong-koo, the great son of the late founder of the Hyundai empire.
The HDC chairman's late father Chung Se-yung, who died in 2005, was credited with nurturing Hyundai Motor into a global brand, and his son had served as Hyundai Motor CEO from 1996 to 1999. Since their forced departure from Hyundai Motor, they have run HDC Hyundai Development, a comprehensive construction company which was separated from the Hyundai empire in 1999.
HDC Hyundai Development is now the parent entity in HDC Group, which has 24 subsidiaries in construction, petrochemicals, retail, property and financial management, healthcare, leisure, sports and finance. HDC has maintained a sound financial structure with its debt ratio staying at 119.7 percent at the end of June.
The acquisition of a 31 percent stake in Asiana and new shares will cause no financial burden to HDC, Chung Mong-gyu said, pointing to cashable assets estimated at 1.6 trillion won ($1.37 billion). "In fact, we are in a financial position that we can take over on our own."
The acquisition of new shares is expected to be worth more than two trillion won, which will significantly improve Asiana's financial health and lower its debt ratio below 300 percent from 660 percent, the HDC chairman said. Experts agree HDC and Kumho will be locked in tough negotiations on the price of acquiring a 31 percent stake.
The HDC chairman reserved concrete comments on Asiana's two budget carriers, Air Seoul and Air Busan, which now face fierce competition in South Korea's saturated low-cost carrier market, saying that his group must make "strategic" judgment. "The most important thing is to strengthen competitiveness."
The chairman predicted synergies in the group's duty-free business, citing Asiana's in-flight duty-free services. His group has partnered with Hotel Shilla to launch a duty-free joint venture called HDC Shilla Duty Free Shop. Hotel Shilla, headed by Lee Boo-jin, the daughter of the ailing patriarch of South Korea's largest conglomerate Samsung Group, is a major operator of luxury hotels and duty-free shops.
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