A three-party alliance led by activist fund KCGI will not submit a shareholder proposal to Hanjin KAL’s annual meeting in March, after siding instead with Korea Development Bank (KDB), another major shareholder in the Hanjin Group’s holding company.

“The alliance ultimately decided not to submit a shareholder proposal after weeks of discussions,” a source with knowledge of the matter said. “It instead intends to vote for a shareholder proposal submitted by KDB.”

The state-controlled bank became the third largest shareholder of Hanjin KAL after investing 500 billion won ($451 million) in the company in December as part of efforts to support the acquisition of debt-ridden Asiana Airlines by Korean Air, the holding company’s subsidiary.

KDB earlier this month submitted a shareholder proposal at Hanjin KAL with several demands aimed at improving corporate governance and addressing the principal-agent problem, including separation of the chief executive and chairman roles and establishment of an environmental, social and governance management committee.

Hanjin Group chairman Cho Won-tae is also likely to agree to KDB’s proposal.

The KCGI alliance would be unlikely to win sufficient support for a shareholder proposal because of a stock dilution after the new share issue in December. There is also no justifiable reason for an attack, with Hanjin KAL’s stock value likely receiving a boost from Korean Air’s takeover of Asiana Airlines in the long term.

Some observers expect the alliance to look to improve its relationship with KDB as it paves the way for its exit from the company in the future.

“Collaborative engagement with Hanjin KAL could lead to the company’s commitment to continuous improvement in its corporate governance practices,” an insider said.

“This would be the best scenario for the three-party alliance, which eventually needs to exit its position in the company at a profitable price.” (Reporting by Ik-hwan Choi)