COVER STORY Ownership battle over Korean Air fuels stock premium, volatility
Kim Sang-yeol, founder and former chairman of Hoban Group / Korea Times file
Hoban weighs 3 scenarios: stake sale, takeover or board influence
Hoban Group is facing a strategic dilemma over its next move in its ongoing ownership battle with Hanjin Group Chairman Cho Won-tae, as sharp swings in Hanjin KAL’s stock make it increasingly costly for either side to keep buying shares to maintain the top shareholder position.
Hoban became Hanjin KAL’s largest shareholder on Nov. 4 after increasing its stake to 20.69 percent, narrowly overtaking the 20.58 percent held by Cho and his affiliates. The shift followed a surge in Hanjin KAL shares.
The stock has since become even more volatile. It hit a record high of 245,000 won on Tuesday before plunging to an intraday low of 185,000 won on Thursday and closing at 203,500 won on Friday. The sharp swings have added to the financial burden on both sides as they continue to accumulate shares in their battle for control.
Hoban has three possible options for its next move.
The first is to sell its stake through a block deal.
Hoban could negotiate with Cho around next year's annual shareholders meeting over whether to halt further purchases and participate in Hanjin KAL's board.
If an agreement proves possible, Hoban could eventually sell its stake in a block deal to another investor, allowing it to realize a premium without continuing an expensive ownership battle.
“The value of Hoban’s stake may ultimately be determined less by its ability to win a shareholder vote than by how much of a premium it can command in a potential block sale,” said Park Se-yeon, an analyst at Hanwha Investment & Securities.
The second option is for Hoban to pursue full control.
Korean Air's passenger jets are parked at Terminal 2 of Incheon International Airport, Nov. 5. Yonhap
Cho has agreed to purchase another 325,000 shares, which could put his side back ahead once the transaction is settled until Jan. 1, 2027. Even then, Park estimates Hoban would need to acquire only about 0.37 percentage points more, worth roughly 46 billion won ($34.4 million) at current prices, to regain the top shareholder position.
But repeatedly buying shares at elevated prices would require significant additional capital, making a prolonged contest increasingly costly for both sides.
The third option is to use its stake to gain board influence.
Hoban's more than 20 percent stake gives it considerable leverage in negotiations over board seats and major corporate decisions. This could allow the group to secure influence without bearing the full financial cost of taking control.
The balance of voting power also complicates the race for the largest stake. Even if Hoban becomes the largest individual shareholder, combined stakes from Cho and his sides, such as Delta Air Lines, surpass those of the construction group by a huge margin.
Hanjin Group Chairman Cho Won-tae delivers a commemorative speech during an event marking the group’s 80th anniversary in Seoul, Sept. 23, 2025. Yonhap
For Hoban, therefore, it is more important to build allies on Hanjin KAL’s board, rather than continuing to pursue the position as the largest shareholder.
If Hoban Group seeks to gain greater management influence over Hanjin Group, Hanjin KAL's regular shareholders meeting in March could offer an opportunity to secure board seats, as the terms of three outside directors recommended by the Korea Development Bank are set to expire.
“If Hoban shifts toward greater management participation, it could gain some representation on the board,” said Yang Seung-yoon, an analyst at Eugene Investment & Securities.
“However, it remains a long way from securing a board majority and taking control of Korean Air. In the longer term, the key variable will be how the state-run lender handles its stake following the restructuring of the group, including the integration of its low-cost carriers.”
Shares of Hanjin KAL sharply increased by around 8 percent during intraday trading, Friday, but returned most of the gains by closing at a gain of only 0.25 percent at the benchmark KOSPI.
“Volatility is expected to persist through the end of the year, as Hoban and Cho remain locked in a neck-and-neck race for the top shareholder position,” an aviation industry official said.
“The battle could also continue to attract more retail investors betting that Hanjin KAL shares will command an even higher premium."