Hyundai Heavy Industries, the world's biggest shipbuilder, has made a preliminary bid for an US$890 million stake in planemaker Korea Aerospace Industries to pare its reliance on the shrinking market for new vessels.
Hyundai Heavy's and Korean Air Lines filed offers for a 42 per cent shareholding yesterday, according to Korea Finance Corp, which is among investors selling shares.
The bidders will get to inspect the planemaker's books before making final offers next month. The stake's value was based on yesterday's closing price.
Korea Aerospace shares jumped the most since their debut on the stock market in June last year on speculation it would benefit from Hyundai Heavy's financial strength and military experience.
The shipbuilder may follow Mitsubishi Heavy Industries and Kawasaki Heavy Industries into aerospace as it contends with rising competition from China and a global order slump.
"Hyundai Heavy taking over would be a far better scenario for Korea Aerospace" than a Korean Air deal, said Paul Hah, an analyst at Woori Investment & Securities. "The purchase could also provide Hyundai Heavy with a stable source of income, especially now when its main business isn't doing all that well."