Jeju Air abandons acquisition of rival Eastar Jet
South Korea’s Jeju Air has halted plans for a majority stake in rival low-cost carrier Eastar Jet.
It cites the expiry of the closing transaction period and a breach of terms.
Jeju last year agreed to acquire a 51% stake in Eastar for $58 million.
Later In March at the height of the Covid-19 pandemic, a cheaper deal was agreed but has not been finalised.
The closing date was 26 June.
"Due to a lapse of the agreement, the stock contract has been cancelled," Jeju Air said in a filing.
"Despite the government’s active support and effort to mediate, we concluded the level of uncertainty Jeju Air needs to assume by pushing ahead with the acquisition is too big," it said.
Jeju Air says cash-strapped Eastar Jet failed to meet certain terms agreed to by the two parties, leading it to call off the acquisition.
Eastar Jet strongly disputes this and issued its own version of events.
"Jeju Air’s claims diverge from the agreement made on the stock purchase agreement, and Jeju Air doesn’t have the right to call off the deal. Jeju Air is instead violating the stock purchase agreement. We urge Jeju Air to commit to the agreement and take responsibility for the violations and its failure to fulfil its duties."
by Ray Montgomery, Asia Pacific editor
TravelMole Editorial Team
Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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