The de facto two-way race over Korea’s full-service carrier Asiana Airlines will likely boil down to the choice of the scale of economies over finance as state authorities began scrutinizing over the candidates each with relative strengths in aviation and capital.

This year’s hottest M&A deal in Korea led by Credit Suisse had three participants – the HCD-Mirae Asset Daewoo consortium, Aekyung Group-Stone Bridge alliance and activist fund group of Korea Corporate Governance Improvement (KCGI) and Hong Kong-based BankerStreet Private Equity – by Thursday deadline, but is more or less a horserace between the two teams led by conglomerate names Hyundai and Aekyung.

Aekyung with ambition to build an aviation empire with its budget carrier Jeju Air has shown more public eagerness and raised its chance by bringing Korea Investment Trust onboard at the last minute, but Hyundai Development Co.-led consortium moved discreetly by bidding the highest bid of over 2 trillion won ($1.73 billion).

Up for sale is a 31 percent controlling stake in Asiana Airlines held by its parent company Kumho Industrial plus management rights through handover of the existing shares worth 400 billion won and issue of new shares worth 800 billion won in the country’s second largest full-service carrier. The seller and its creditors have been hoping to fetch about 2 trillion won from the sale that bundles up two budget carriers and maintenance unit under Asiana.

Both Hyundai Development Co.-led consortium and Aekyung Group team have reportedly offered over 2 trillion won, eliminating the third contender KCGI-led consortium with lacking financial means.

The two strong contenders are known to have submitted a disappointing tender of below 400 billion won for the 31 percent controlling stake held by Kumho Industrial, making the sale tricky and adding woes to the parent company, according to sources on Thursday.

The 31 percent stake in Asiana Airlines is worth 364.2 billion won based on its closing price of 5,310 won apiece on Thursday.

The decision on the fate of an airliner is now more up to the state authorities rather than creditors.

The Ministry of Land, Infrastructure and Transport immediately embarked on the review as it would have to consider the broad ramifications on the strategic industry. M&A in aviation falls under stricter guidelines. Under the aviation law, a manager of an airliner must have foreign ownership under 50 percent and be free of any criminality related to aviation.

The process to pick up a preferred bidder usually takes a week or more but can vary depending on various conditions, according to the creditors.

By Han Woo-ram, Song Gwang-sup, Kim Gang-rae and Lee Ha-yeon

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]