Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Hanjin, LS deepen business ties to counter Hoban
Korean Air passenger jets are seen at Incheon International Airport in this undated photo. Yonhap
By Lee Min-hyung
Hanjin Group and LS Group are deepening their business alliance to counter Hoban Group’s aggressive stock purchases of the two firms.
The move is aimed at fending off Hoban, best known for its construction business, which has engaged in a buying spree of shares in Hanjin KAL and LS Group. Hanjin KAL is the holding firm of Hanjin Group.
Hoban Group recently increased its stake in Hanjin KAL to 18.46 percent, narrowing the gap to just 2.29 percentage points with Hanjin Group Chairman Cho Won-tae, who holds 20.75 percent. Hoban also acquired over a 3-percent stake in LS Group, posing a potential threat to the management rights of both firms.
In response, Hanjin and LS signed three memorandums of understanding (MOUs) in April and May, in an apparent move to overcome the uncertain management environment.
Last month, Korean Air, a flagship aviation business affiliate from Hanjin Group, decided to forge ties with LS Electric, which offers power equipment and smart factory consulting and maintenance services, in aerospace and defense at the International Maritime Defense Industry Exhibition. The two are widely expected to join forces as LS Electric potentially establishes smart factory infrastructure.
Both firms said they will build a mutually supportive system in human and material resources as well as information sharing. The decision reflects their consensus on the need to strengthen their exchanges to address the growing business challenges posed by Hoban’s stock acquisition.
LS Eco Energy, an affiliate of LS Group that operates a cable business primarily in Southeast Asia, also recently revised the articles of its incorporation by including materials sales. These cables are used for the aerospace business, raising hopes for LS Electric's further ties with Korean Air.
Industry officials expected Hanjin and LS to expand to counter escalating threats from Hoban.
“Given the latest footprints of their bilateral partnerships, Hanjin and LS will likely forge more ties amid unceasing risks from Hoban’s stock acquisition,” an industry official said. “However, Hoban has more options. Even if it fails to win the management right of Hanjin KAL, it can opt to make a profit by selling the stake later.”