'200 Billion Won M&A Deal Collapse Deposit Lawsuit' Asiana Wins Against HDC Hyundai Development

Asiana Airlines is showcasing a wrapped aircraft featuring images of key members of the national soccer team, including Son Heung-min, Hwang Hee-chan, Hwang Ui-jo, Kim Min-jae, and Kim Seung-gyu, on the 17th. The wrapped aircraft will operate on various routes, including domestic flights as well as routes to the Americas, Europe, and Southeast Asia, until December, soaring through skies worldwide. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Kim Daehyun] The court has ruled that Asiana Airlines, whose M&A (mergers and acquisitions) deal fell through, does not need to return the performance bond received from the HDC Hyundai Development Consortium.

On the morning of the 17th, the Civil Division 16 of the Seoul Central District Court (Presiding Judge Moon Seonggwan) ruled in favor of the plaintiffs in the first trial of the pledge extinction claim lawsuit filed by Asiana Airlines and Kumho Construction against HDC Hyundai Development and Mirae Asset Securities, among others.

The court ordered HDC Hyundai Development and others to notify that the pledge on the contract deposit has been extinguished and to pay 1 billion KRW to Asiana Airlines and 500 million KRW to Kumho Construction.

Previously, in November 2019, HDC Hyundai Development formed a consortium with Mirae Asset Daewoo to pursue the acquisition of Asiana Airlines. After being selected as the preferred negotiator, they signed a Stock Purchase Agreement (SPA) and paid a performance bond of approximately 250 billion KRW, which is 10% of the transaction amount.

However, Asiana Airlines judged that HDC Hyundai Development lacked the intention to acquire and notified the termination of the M&A contract. They also filed a pledge extinction claim lawsuit to forfeit the performance bond. The purpose was to have the pledge (security) released so that HDC Hyundai Development could use the amount paid for the acquisition of new and existing shares.

On the other hand, HDC Hyundai Development argued that the responsibility for the contract failure lay with Asiana Airlines. They claimed that Asiana Airlines refused the requested reassessment due to changes in the business environment caused by the spread of COVID-19 and that there were undisclosed liabilities on the financial statements.

If the lawsuit result is finalized, the contract deposits paid by HDC Hyundai Development and others will be attributed to Asiana Airlines (217.7 billion KRW) and Kumho Industrial (32.3 billion KRW), respectively.

In a 'precedent' involving the failed Daewoo Shipbuilding & Marine Engineering M&A in 2008, Hanwha Group and KDB Industrial Bank engaged in fierce legal battles. After Hanwha Group gave up the acquisition, they succeeded in recovering 195.1 billion KRW out of the 315 billion KRW contract deposit by overturning the first and second trial rulings at the Supreme Court.