The ownership contest comes at a critical juncture for Cho, who is preparing to complete the nearly six-year integration of South Korea's two largest airlines into a global aviation powerhouse. The merger, among the most ambitious in the country's corporate history, is expected to create one of the world's 10 largest airlines by fleet size.
Cho, chairman and CEO of Hanjin Group and Korean Air, signed an agreement Monday to acquire 325,000 additional common shares in Hanjin KAL for 37.05 billion won ($27.6 million), according to a regulatory filing with the Financial Supervisory Service.
The shares will be purchased at 114,000 won apiece through an off-hours block trade, with settlement scheduled for Dec. 3 or another date agreed upon by the parties. The disclosed transaction period extends through Jan. 1, 2027.
Once completed, the purchase will raise Cho's personal holding from 3,869,612 shares, or 5.75 percent, to 4,194,612 shares, or 6.23 percent. Including family members and other related parties, his combined stake is expected to reach 21.06 percent.
Shares surged 13 percent in after-hour trading as of 7:30 p.m. Monday in Seoul, extending an 8.8 percent rally during the regular session. Korean Air, in which Hanjin KAL owns a 26.13 percent stake, jumped more than 7 percent as investors weighed the prospect of an escalating shareholder contest.
Cho described the purpose of the purchase as strengthening responsible management. Hanjin Group said the transaction had been planned for some time and was unrelated to Hoban's recent share purchases.
The timing nevertheless puts the spotlight back on a simmering ownership contest over South Korea's largest airline group.
Hoban recently acquired additional Hanjin KAL shares through open-market purchases and filed a business combination notification with the Fair Trade Commission (FTC) in October after determining that its holding may have surpassed that of Cho and his related parties.
As of July 10, Hoban held 20.15 percent of Hanjin KAL, just 0.42 percentage point behind the 20.57 percent held by Cho and related parties as of June 30.
The exact size of Hoban's latest stake has not been publicly confirmed. Hanjin KAL said in a separate regulatory disclosure Monday that it would provide an update once the relevant details were verified or within one month.
Hoban became Hanjin KAL's second-largest shareholder in 2022 after acquiring shares previously held by activist private equity firm KCGI. It has since steadily increased its investment, narrowing the ownership gap with Cho's side.
Under South Korea's competition law, companies meeting certain size thresholds must notify the FTC when they acquire at least 15 percent of a listed company and again when subsequent purchases make th em its largest shareholder.
Cho retains the backing of major investors, including Delta Air Lines, which held 14.90 percent of Hanjin KAL at the end of June, and state-run Korea Development Bank, which held 10.58 percent. Together with Cho's family and related-party holdings, those stakes would represent more than 46 percent following his planned purchase, assuming no other changes.
The National Pension Service, another major investor with a reported 5.46 percent stake, could also become an important factor in any future shareholder contest.
Hoban has maintained that its share purchases are for investment purposes rather than management participation. Still, its steady accumulation of shares has revived questions over the longer-term ownership of Hanjin KAL.
The stakes have become higher as Korean Air approaches the Dec. 17 launch of its integrated carrier, which will absorb Asiana Airlines and retire its brand after decades of rivalry.
The merger will mark the culmination of a consolidation process launched in November 2020, reshaping South Korea's aviation industry and expanding Korean Air's international reach.
While the latest shareholder maneuvers do not directly affect the approved airline merger, they introduce a fresh ownership uncertainty just as Cho prepares to preside over the biggest transformation in Hanjin Group's history.
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