HDC eyes biz diversification with acquisition of Asiana Airlines

A consortium led by construction firm HDC Hyundai Development Company has been named as the preferred bidder to acquire South Korea's second-biggest carrier, Asiana Airlines.Once finalized,... HDC will be a group that encompasses aviation, construction, distribution and logistics.Lee Seung-jae reports.HDC Hyundai Development Company has long been a leader in South Korea's construction and distribution industry.However, they are looking to diversify their business with the acquisition of Asiana Airlines.Having outbid two other companies for Kumho's 31 percent stake in the carrier,... HDC's financial asset ranking will jump from 33rd to 17th once the deal is done.It's thought HDC will pay two-point-one billion U.S. dollars for the airline.In addition, there will be a huge synergy effect for HDC,... if they're able to combine Asiana Airlines with their hotel, resort, and duty-free businesses.However, experts warn there may be a so-called 'winner's curse'.With concerns about the airline's massive debt levels and unstable fund flows,... the asset could be valued far less than how much HDC is paying for it."The debt ratio is quite high for Asiana Airlines. HDC should pay attention to the company's financial soundness first, gain some corporate bond ratings, and then expand externally."Others are more optimistic,... saying the acquisition will invigorate the stagnant domestic aviation industry by making Asiana Airlines more competitive with the nation's number one carrier, Korean Air.Lee Seung-jae, Arirang News.