Sale of Yeorimdang Stake for 250 Billion KRW
Initiation of Air Premia Acquisition
“Tourism Business Synergy Expansion”
T’way Air has come under the wing of Chairman Seo Jun-hyuk (pictured) of Daemyung Sono Group. As entry into the aviation industry has been a long-held ambition for Chairman Seo, there is growing anticipation for the synergy with the existing hotel and resort tourism businesses. Furthermore, with Daemyung Sono having announced plans to acquire Air Premia after successfully acquiring T’way Air, it’s expected that the acquisition process for Air Premia will accelerate.
Daemyung Sono Group announced through a disclosure on the 26th that it has signed a stock purchase agreement (SPA) to acquire a 46.26% stake in T’way Holdings, which holds a 28.02% stake in T’way Air, for 250 billion KRW. Consequently, Daemyung Sono Group now holds a total of 54.79% stake, combining T’way Holdings’ 28.02% stake in T’way Air with its existing 26.77% stake.
Daemyung Sono Group plans to change the name of T’way Air in the future. The goal is to establish a distinct identity under “SONO” and provide a differentiated customer experience to present a new paradigm in the aviation industry.
It has been about 14 years since Chairman Seo embarked on the full-scale acquisition of an airline for his “dream entry into the aviation industry.” A previous attempt to acquire T’way Air in 2011 was unsuccessful due to insufficient funding. This latest entry into aviation is therefore seen as a significant move that could alter the dynamics of the domestic aviation market.
From June to July last year, Daemyung Sono Group, through its affiliates Sono International and Daemyung Sono Season, acquired shares of T’way Air from private equity fund JKL Partners. As a result, Daemyung Sono Group became the second-largest shareholder of T’way Air with a 26.77% stake. Given that the difference in shareholdings with Yeorimdang was only 3.3 percentage points, there were widespread predictions that a prolonged management dispute might occur.
Last October, there was an attempt to acquire additional shares from Yeorimdang, but differences in price expectations between the two companies led to a breakdown in negotiations. During the negotiations, it was widely believed that Yeorimdang would eventually sell its T’way Air shares to Daemyung Sono, given its weaker financial position compared to Daemyung Sono. Instead of a showdown at a shareholder meeting, Yeorimdang opted for negotiations to sell its stake.
Now that the final negotiations with Yeorimdang have been concluded, the acquisition of Air Premia by Daemyung Sono is expected to gain momentum. Previously, Daemyung Sono had disclosed plans to acquire Air Premia following the successful acquisition of T’way Air. Additionally, Daemyung Sono has already acquired a 50% stake in JC Aviation’s first limited company’s shares in Air Premia and holds a call option to purchase the remaining 50% after June this year, positioning it to become the second-largest shareholder of Air Premia later this year.
Along with the acquisition, Daemyung Sono Group has presented a future vision focusing on enhancing aviation safety, maintenance capabilities, expanding professional personnel, increasing profitability, and synergizing the leisure-aviation industries. The group emphasized that its primary business value would be “aviation safety.” It plans to invest more in adherence to international safety standards, strict operating procedures, regulations compliance, and aircraft maintenance and inspection systems.
Daemyung Sono Group stated, “We plan to grow beyond the business model of traditional low-cost carriers (LCCs) into an airline offering services and operations comparable to full-service carriers (FSCs), making ourselves a rational choice for customers.” They added that they aim to increase profitability through sales and operating income growth and secure sustainable growth drivers to enhance shareholder value.
Lastly, they mentioned, “We will prepare for industrial synergy through developing linked products, promotions, and marketing through travel agencies, based on our domestic 20 hotels and resorts, including the soon-to-open Sol Beach Namhae, as well as international infrastructure in countries like the US, France, and Hawaii. We also plan to join a major airline alliance to secure a global network and expand the scope of our business in the future.”
Chairman Seo pledged, “We promise to transform into a safe and reliable airline” and expressed an aspiration “to leap forward as a global airline that satisfies stable management, customers, and all employees.”