Asiana Airlines stock volatile after takeover report; SK Group denies interest

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SEOUL (Reuters) - South Korea's Asiana Airlines Inc saw its stock jump as much as 23 percent on Tuesday after local media reported a possible takeover by SK Group, before erasing gains after the conglomerate denied having any interest in the airline business.

South Korea's second-biggest full-service carrier has been battling low-cost rivals and mounting debt, resulting in creditor-led restructuring. It suffered an image setback earlier in July when it was unable to provide meals on some flights after a change in caterer left the airline short.

Before market open on Tuesday, News Tomato reported SK Group was considering taking over Asiana, citing an unidentified senior official at the group.

Asiana's share price subsequently rose to as much as 5,130 won ($4.56), its highest since May 21.

About an hour into the trading day, SK Holdings Co Ltd issued a regulatory filing denying any interest in Asiana, with SK Group Chairman Chey Tae-won later repeating the denial to reporters.

Asiana's stock dropped back, eventually closing up 3 percent.

SK Group is South Korea's third-biggest conglomerate by assets. Its listed subsidiaries include chipmaker SK Hynix Inc and oil refinery SK Innovation Co Ltd.

"If SK Group acquired Asiana, it would help SK Hynix reduce transportation costs of its memory chips," said chief analyst Kim Ik-sang at BNK Securities.

Analyst Lee Han-joon at KTB Investment and Securities said there was little appetite for the airline's parent, Kumho Asiana Group, to sell its mainstay unit.

"Asiana Airlines may draw potential M&A appetite from domestic conglomerates due to the high demand for airline businesses, but I don't think the parent will sell the core unit that is still making money," Lee said.

Asiana, which also runs low-cost carriers Air Busan and Air Seoul, told Reuters it had no knowledge of the matter.

($1 = 1,124.3900 won)

(Reporting by Heekyong Yang and Ju-min Park; Editing by Muralikumar Anantharaman and Christopher Cushing)