By Kanga Kong
SEOUL--Major shareholders of Korea Aerospace Industries Ltd. (0478410.SE) have extended by two weeks the due diligence process for the bidding of their combined 41.8% stake in the airplane components maker, worth an estimated $1 billion.
"We decided to extend the due-diligence period to Dec. 7 and take final bids by Dec. 17 due to the requests by preliminary bidders," Korea Finance Corp., KAI's largest shareholder, said Wednesday in a statement.
Two preliminary bidders, Korean Air Lines Co. (003490.SE) and Hyundai Heavy Industries, have asked the sellers for an extension, saying they couldn't complete due diligence by Nov. 23, as originally scheduled, as they faced strong resistance from KAI's labor union to complete the process.
Most analysts say the deal is unlikely to close by the year-end--as targeted by the key shareholders--or may fall through as some lawmakers are against the deal, particularly ahead of the presidential election on Dec. 19.
The deal is valued around 1.12 trillion won based on KAI's Tuesday closing price of KRW27,450.
The planned sale is the second after shareholders failed in August to attract sufficient bidding interest, with Korean Air being the sole bidder then. Under Korean law, any auction of state-owned company's assets must attract at least two bidders before it can proceed.
Korea Finance is selling 26.4% of KAI with the remaining 15.4%stake being sold by Hyundai Motor Co. (HYMLY), Doosan Group and Samsung Techwin Co. (012450.SE).
Korea Aerospace was formed in 1999 through the merger of the aerospace divisions of Samsung, Hyundai and the now-defunct Daewoo Group, during the 1997-98 Asian financial crisis.
Write to Kanga Kong at firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 27, 2012 21:28 ET (02:28 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.