Daily BriefsEvent-Driven

Event-Driven: Healthcare Merger Corp, Asiana Airlines and more

By September 12, 2020 No Comments

In today’s briefing:

  • MergerTalk: Healthcare Merger/SOC Telemed-Why This Deal Can Join The Exclusive SPAC Winners Club
  • HDC Hyundai Development Gives Up on the Asiana Airlines Acquisition – Privatization on the Way?

MergerTalk: Healthcare Merger/SOC Telemed-Why This Deal Can Join The Exclusive SPAC Winners Club

By Robert Sassoon

SPAC Healthcare Merger Corp (HCCO US) ‘s pending merger with SOC Telemed, a leader in high acute telemedicine looks like another good wave to catch by SPAC investors. As we highlighted in our Insight published on September 3, 2020 – MergerTalk: SPACs May Have Become The Hot New Trend, But SPAC Investment Requires A Health Warning – the majority of these SPAC merger transactions have turned out to be poor investments. In that piece, we argued for selectivity and caution.  Of the winners, it appears that investors are most excited about transactions in “emerging” trends such as green mobility or pandemic resistant areas such as online gaming and packaged/healthy foods. We would add the Telehealth industry as another emerging trend that has garnered investor enthusiasm this year.

While we have seen a couple of successful direct Telehealth IPOs this year, and a sizeable and high priced merger transaction in the sector  involving Teladoc Health, Inc. (TDOC US) and  Livongo Health Inc (LVGO US), the pending HCCO/SOC Telemed merger is the first of its kind in the SPAC investment space.  We believe that this somewhat differentiated Telehealth situation has the ingredients to join the exclusive club of winning SPAC related transactions. We detail our case for HCCO/SOC Telemed  as an attractive investment proposition below.


HDC Hyundai Development Gives Up on the Asiana Airlines Acquisition – Privatization on the Way?

By Douglas Kim

It was announced after the market close on Friday that HDC Hyundai Development Co-Engineering & Construction (294870 KS) has finally given up on its intentions to acquire Asiana Airlines (020560 KS), the second-largest airliner in Korea. Back in December 2019, HDC Hyundai Development initially agreed to acquire a 30.8% stake in Asiana Airlines, as well as new shares to be issued, and its affiliates for 2.5 trillion won (US$2.1 billion).

Following the cancellation of this M&A deal, the financial regulators approved a capital injection of 2.4 trillion won into Asiana Airlines to keep the company alive. The KDB and the Eximbank have already injected a combined 3.3 trillion won, including 1.7 trillion won this year, into Asiana Airlines in the past two years. HDC Hyundai Development paid 250 billion won in a down payment of this M&A deal. The company will file a lawsuit to recover part of this down payment but it is unlikely to recover them, in our view. 

The bottom line is that Asiana Airlines currently has a market cap of 0.9 trillion won and there is a looming probability of the creditors requesting for much bigger control of the company in return for 2.4 trillion won which could result in a sharp decline in the share price of Asiana Airlines in the coming weeks. 


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