SEOUL: Atlanta-based Delta Airlines has purchased a stake in Korean Air’s parent company, helping shore up the family that owns the firm against the building threat from activist shareholders.
Delta acquired a 4.3% stake in Hanjin KAL it said Thursday, adding that it could increase the position to 10%” after receiving regulatory approval”.
The stake acquisition comes a year after the two airlines launched a joint venture, providing access to nearly 300 destinations in the US and 80 spots in Asia.
It is a boost for Hanjin KAL’s new chairman Walter Cho and will help the airline “defend its management rights against any attacks of activist hedge funds”, a Korean Air official was quoted as saying by South Korean’s Yonhap News Agency.
They include the Korea Corporate Governance Improvement (KCGI) fund that owns a nearly 16% stake in the company and is demanding larger returns and more transparency.
In April, Cho took control of Hanjin KAL from his father Cho Yang-ho, who was kicked off the board by shareholders backed by activist funds just days before he died.
The acquisition sent shares in Hanjin KAL tumbling 15% Friday. Shares in Korean Air, South Korea’s flag carrier, also dropped 2.6%.