Recent Developments

Korean Air is currently in the process of the sale of Asiana Airlines' cargo operations business as part of a new share subscription transaction involving KRW 1.5 trillion worth of newly issued shares by Asiana Airlines. The sale of the cargo operations business is a condition for obtaining merger control approvals from the European Commission and the Japan Fair Trade Commission. Air Incheon participated in the bidding for the sale of Asiana Airlines' cargo business (the "Target Business") and was selected as the preferred negotiator on June 17, 2024. On August 7, 2024, a Master Agreement was signed between Korean Air and Asiana Airlines regarding the sale of the Target Business (the "Transaction"). Following the European Commission's approval and in accordance with the Master Agreement, Air Incheon is expected to sign a merger through division agreement with Asiana Airlines after the completion of the new share subscription transaction between Korean Air and Asiana Airlines. Air Incheon will then acquire the Target Business through a merger through division with a transfer of funds scheduled for mid-2025, with the transaction value amounting to KRW 470 billion.

The merger through division and acquisition of the airline business is a unique transaction with no prior precedents. After the transaction, Air Incheon is to independently operate the Target Business, which involves complex issues such as obtaining domestic and international aviation licenses, identifying the assets for sale, and entering into a Transition Services Agreement. Despite such complex issues, Lee & Ko successfully advised Air Incheon based on its expertise in M&A transactions as well as its deep understanding of the aviation business until the signing of the Master Agreement. In addition, the transaction, reflecting the distinctions of the transaction and the will of the parties, was unique in that it was structured as a grant-in-aid merger, which is not common in practice in the M&A market. Furthermore, the transaction required the approval of the European Commission in addition to the usual merger clearance procedures of domestic and foreign competition authorities, which was successfully advised by both the M&A and Antitrust teams of Lee & Ko.

Lee & Ko provided legal advice on domestic and international aviation regulatory reviews, legal due diligence on the Target Business, negotiation of the Master Agreement, and related legal issues up to the signing of the Master Agreement. Lee & Ko will continue to advise on matters related to obtaining necessary domestic and international regulatory approvals, as well as on the execution of the merger through division agreement until the completion of the Transaction.
 

This transaction, involving SK Group’s corporate restructuring, is composed of three mergers with the first being a merger between SK On Co., Ltd. (“SK On”) and SK Enterm Co., Ltd. (“SK Enterm”), with SK On as the surviving company and SK Enterm as the dissolving company. The second merger is between SK On and SK Trading International Co., Ltd. (“SK Trading International”), with SK On as the surviving company and SK Trading International as the dissolving company, followed by the last merger between SK Innovation Co., Ltd. (“SK Innovation”) and SK E&S Co., Ltd. (“SK E&S”), with SK Innovation as the surviving company and SK E&S as the dissolving company. 

This transaction attracted significant market attention due to the following factors: (i) it was part of a restructuring within SK Group, one of the largest conglomerates in South Korea, (ii) the combined net asset value of the merging companies amounted to approximately KRW 25 trillion, making it one of the most notable M&A deals in the country this year by scale, and (iii) some of the merging companies had FI shareholders, making negotiations and securing consent from these shareholders a critical element of the transaction. 

Through this transaction, SK Innovation absorbed SK E&S, the largest private LNG company in Korea, making itself into a major energy corporation with KRW 100 trillion in assets and KRW 88 trillion in sales. This positions SK Innovation not only as a leading company in Korea but also as the largest private energy company in the Asia-Pacific region. SK On’s merger with SK Trading International, the only company in Korea specializing in crude oil and petroleum product trading, and SK Enterm, the largest commercial tank terminal company in Korea, allowed the company to enhance its competitiveness in raw material sourcing. As a result, through this transaction, each company has significantly strengthened its capabilities to lead the energy and raw materials industries in Korea.

Lee & Ko provided comprehensive legal advice regarding the drafting of the merger agreement, negotiating and concluding agreements with financial investors (FIs) and other stakeholders, and advising on various contracts related to the transaction. Lee & Ko also reviewed the transaction structure, overall schedule of the transaction, legal issues related to procedures such as board of directors’ meetings, shareholders’ meetings, public disclosures, holding company regulations, and merger filings. With Lee & Ko’s prompt legal advice, the signing of the transaction was completed successfully, and the firm will continue to provide effective legal counsel until the successful completion of the transaction.

Lee & Ko acted as legal advisor to the lead arrangers in the IPO of Shiftup. 

Shiftup's IPO was one of the largest IPOs in 2024 with an offering size of KRW 435 billion. As a company that owns the IP of games that enjoy a reputation in the global market such as Nikke and Stellar Blade, Shiftup received a great deal of attention from domestic and foreign markets starting from the IPO preparation stage. NH Investment & Securities, Korea Investment & Securities, and JP Morgan participated as lead managers. The IPO was conducted through an overseas parallel public offering. The IPO was successfully completed in July 2024.

Lee & Ko was Korean legal counsel to the lead sponsors and provided advisory services to the lead sponsors during the IPO process, including legal due diligence, review of documents related to domestic and international public offerings, including securities filings and offering circulars. Lee & Ko's experts were recognized for their timely and accurate advice on various issues during the IPO process and contributed to the successful completion of the IPO. In addition to Shiftup's IPO, Lee & Ko has been actively advising other clients in the equity capital market sector, including the IPO of KB Balhae Infrastructure Company in the second half of 2024, which was the first IPO of KB Balhae Infrastructure Company in 20 years as an investment company, as well as the IPOs of iMBDX, SChem, and K3I.

In accordance with the implementation of “Responsibilities Map” under the amendment to the Act on Corporate Governance of Financial Companies of Korea, Lee & Ko provides advice on legal coherence for the BNK Financial Group as well as the subsidiaries of the BNK Financial Group with an aim to prepare or improve executives’ accountability statements, accountability systems, and management measures to fulfill their internal control and management obligations. As a large-scale compliance project at the financial group level, this project is of a great significance as a compliance project with respect to financial holding companies that control and encompass various business sectors such as banks, securities companies, and asset management companies. This project is a leading case to ensure reasonable and appropriate performance of duties on the part of senior management by referring to the UK’s Senior Management & Certification Regime.

In September 2024, Lee & Ko successfully assisted DSRV and BDACS in obtaining their Virtual Asset Service Provider (VASP) registration with Korean financial authorities.

These approvals mark a significant milestone, being the first granted in approximately a year since August 2023. Among roughly 20 companies that submitted VASP registration applications through September 2024, only these two companies, both represented by Lee & Ko, received regulatory approval.

As a virtual asset validation service provider, DSRV partnered with Lee & Ko from the initial stages of preparation. Lee & Ko team provided comprehensive guidance on the scope of ISMS certification and virtual asset business activities, while efficiently managing regulatory inquiries throughout the process.

For BDACS, a virtual asset custody service provider, Lee & Ko team developed a strategic approach that emphasized the company’s unique strengths in the market. Lee & Ko worked closely with the client to optimize their ISMS certification scope and business framework to meet regulatory requirements.

These successful registrations are especially noteworthy given the increasingly stringent regulatory environment for virtual asset service providers, including recent platform-related incidents that have led to heightened scrutiny. Despite the regulatory authorities’ conservative stance and extended processing times, Lee & Ko leveraged its extensive expertise across financial regulations, corporate law, foreign exchange, taxation, and virtual assets to secure these approvals.

In May 2024Lee & Ko successfully represented the Ministry of Education(“MOE”) and the Ministry of Health and Welfare(“MOHW”), in the injunction case filed by professors and students of medical schools.

Faced with shortage of doctors, MOE and MOHW announced a policy to increase the annual enrolment quota for nationwide medical schools from 3,000 to 5,000 starting in 2025. In response to the government's policy, the medical students refused to attend classes and the doctors left the hospitals. In March 2024, Medical school professors and students applied for an injunction to prevent the government from enforcing the policy, arguing that the excessive increase in enrolment quota would seriously impede medical education. 

The trial court dismissed the case finding that the plaintiffs lacked standing to apply for the injunction in March 2024. However, the appellate court ordered the MOE and MOHW to submit evidence supporting the increase of the enrolment quota by 2,000. Given the significance of the matter, the MOE and MOHW retained Lee & Ko. Lee & Ko argued that the court should refuse to grant the injunction as the government sufficiently consulted with the medical community and the policy was essential for public welfare. In May 2024, after a thorough review of the records, the appellate court determined that the plaintiffs did have standing to file the lawsuit. However, the appellate court did not grant the injunction because granting the injunction would have a significant impact on public welfare.

The government's policy to increase the enrolment quota for medical schools was the most talked-about issue this year. As the decision acknowledges that the government's policy is essential for public welfare, it will assist the government in further pursuing its policy.
 

On behalf of Ilsan Grand Bridge Corp (“IGB”), Lee & Ko secured a winning award against Gyeonggi Province (the “Province”) in November 2022 in a lawsuit. The Appellate court also dismissed the appeal filed by the Province in May 2024.

IGB, a corporation established under the Act on Public-Private Partnerships (“PPP”) in Infrastructure (the “Act”) completed construction of Ilsan Bridge in 2008. The Province issued a business license granting IGB to manage the Ilsan Bridge for 30 years on the condition that IGB would transfer the title of the bridge to the Province after 30 years (According to IGB’s estimates, its expected profits from managing the Bridge until 2038 was USD 636 million). However, dissatisfaction among commuters grew as they needed to pay tolls to use the bridge. Around October 2021, the Province executed an administrative order to cancel IGB’s rights in the name of the public good and abolished the tolls.

Lee & Ko persuasively argued that even if the Province may cancel IGB’s business license under the Act, such administrative order must show that the public interest outweighs IGB’s right to a business license. Agreeing with Lee & Ko’s arguments, the court found that the administrative order lacked a clear public interest to revoke IGB’s rights and canceled the administrative order in November 2022. The Appellate Court affirmed the lower court’s decision in May 2024.

This case was the first case regarding the validity of an administrative order under the Act on which criteria the administrative order could be justified in the name of the public good, and thus will likely serve as an important precedent for the PPP projects.
 

On behalf of Samsung Bioepis, Lee & Ko’s Intellectual Property Practice Group prevailed in patent invalidation and infringement actions relating to Soliris®, paroxysmal nocturnal hemoglobinuria treatment, thereby enabling Samsung Bioepis to launch its biosimilar on an earlier schedule.

Soliris® is a rare disease treatment developed by Alexion Pharmaceuticals (“Alexion”), a U.S. pharmaceutical company, and is an extremely expensive drug with annual costs borne by each patient reaching KRW 500 million (approx. USD 363,100).  Alexion, the patentee, held two registered patents for Soliris®, of which the composition patent expired in 2015, with only the use patent remaining at the time of the suit.  Last June, Samsung Bioepis preemptively filed an invalidation action against the use patent, and in response, Alexion filed a patent infringement suit against Samsung Bioepis.

Lee & Ko argued that the priority claim of the asserted patent should be denied and that there was a lack of novelty and inventive step.  The Intellectual Property Trial and Appeal Board (the “IPTAB”) agreed and invalidated Alexion’s patent.  Alexion appealed the decision to the IP High Court, which affirmed the IPTAB’s decision, again siding with Lee & Ko’s arguments.  With Alexis deciding not to file an appeal with the Supreme Court, the determination on the patent invalidity became final and conclusive.  Samsung Bioepis also won in the patent infringement suit on the ground that the filing of the suit amounted to an abuse of patent rights based on an invalid patent.

Based on these wins, Samsung Bioepis obtained market approval for Epysqli®, a biosimilar of Soliris®, from the Ministry of Food and Drug Safety in January 2024 and successfully launched the product in Korea in April.
 

Lee & Ko advised LG Electronics on the issuance of overseas bonds in the amount of US$800 million. 

By way of this transaction, LG Electronics is back on track after a gap of 17 years and solidified its position in the Korean Paper market. The bonds were issued in three-year and five-year fixed rate bonds respectively divided into US$500 million and US$300 million, with the five-year bonds issued in the form of a sustainability bond.

LG Electronics, breaking surface in the issuer market after a long pause, was well received by global investors in Asia, the U.S., and Europe, leading to the additional interest rate (spread) being set at the rate that is approximately 40bp lower than the initial price guide (IPG). The managers involved, amongst others, were BNP Paribas, Citigroup, HSBC, JP Morgan, Korea Development Bank, and Standard Chartered Bank.

In this transaction, Lee & Ko provided LG Electronics with a comprehensive and in-depth advice on and around the overall issuance on the basis of its review of applicable laws and regulations related to issuance, relevant contracts and offering circular, and government approvals and licenses. Thanks to its expertise accumulated through many years of experience, Lee & Ko provided advice swiftly and accurately and significantly contributed to the seamless and successful closing of the transaction.

In addition to the issuance of LG Electronics’ overseas bonds, Lee & Ko has been widely recognized for its proven expertise by taking part in the mainstream transactions in the Debt Capital Market area, including but not limited to the transactions involving the issuance of overseas bonds in the amount of US$600 million for Mirae Asset Securities, US$1 billion for Hyundai Capital, US$1.4 billion for Korea National Oil Corporation, US$600 million for Korea Ocean Business Corporation, US$600 million for KB Kookmin Bank, and US$500 million for Korea Expressway Corporation in the first half of 2024.