July 17, 2018 / 1:51 AM / a year ago

Asiana Airlines shares surge after media report on SK Group weighing takeover

SEOUL, July 17 (Reuters) - Shares of South Korea’s Asiana Airlines Inc jumped as much as 23 percent on Tuesday after a local media outlet reported that domestic conglomerate SK Group is considering a takeover.

The shares climbed even though the conglomerate’s holding firm SK Holdings said in a regulatory filing it is not considering buying the airline. An Asiana Airlines spokesman said the company had no knowledge of the matter.

South Korea’s local online news outlet News Tomato reported that SK Group is considering the takeover, citing an unnamed senior official of the group. Asiana shares rose to as high as 5,130 won, their highest since May 21. They later gave up a chunk of the gains to be up 7.3 percent.

Asiana Airlines, South Korea’s second-biggest full-service carrier, has struggled in recent years and underwent a creditor-led restructuring programme to improve its performance by selling assets.

In early July, Asiana was mired in a controversy over its poor handling of in-flight meals to its passengers after a caterer was unable to deliver the food on time.

Asiana has takeover appeal for the chips-to-energy SK Group to help reduce transportation costs for the company’s flagship products including memory chips, Kim Ik-sang, chief analyst at BNK Securities, said.

SK Group, South Korea’s third biggest conglomerate by assets, includes chipmaker SK Hynix Inc and refinery SK Innovation.

“If SK Group acquires Asiana, it would help SK Hynix reduce transportation costs of its memory chips,” said Kim. (Reporting by Heekyong Yang and Ju-min Park; Editing by Muralikumar Anantharaman)

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