Tue, Nov 16, 2010 - Page 10 News List

Hyundai Motor, Hyundai Group bid for builder

Bloomberg

Hyundai Motor Group and Hyundai Group have submitted rival offers for a stake in South Korea’s biggest builder, extending a decade-long feud in one of South Korea’s richest families.

The final bids for 35 percent of Hyundai Engineering & Construction Co were handed in before a 3pm deadline yesterday, said Kim Sun-gyu, a spokesman at Korea Exchange Bank, one of the builder’s creditors. There were no other offers for the shares, worth 2.8 trillion won (US$2.5 billion) at yesterday’s closing price.

Hyundai Motor Co chairman Chung Mong-koo, the eldest surviving son of the original family group’s founder, is competing for control of what was his father’s flagship company against his late brother’s widow, Hyundai Group chairwoman Hyun Jeong-eun. The preferred bidder may be named as early as today, Korea Finance Corp, the biggest shareholder in the Seoul-based builder, said last week.

Hyundai Motor Group’s bid was made through Hyundai Motor Co, Kia Motors Corp and Hyundai Mobis Co, executive vice president Kim Bong-kyung confirmed yesterday. Hyundai Group’s bid was made through listed units Hyundai Merchant Marine Co, Hyundai Securities Co and Hyundai Elevator Co, according to a statement. Neither group said how much they offered.

Hyundai Engineering dropped 0.5 percent to close at 73,100 won in Seoul trading. Hyundai Merchant fell 4.4 percent to 45,150 won and Hyundai Motor Co declined 0.3 percent to 176,500 won.

The Hyundai Engineering sale will probably be completed in the first quarter of next year, according to Korea Finance. The deal would be the biggest for a construction company in South Korea since Kumho Asiana Group bought Daewoo Engineering & Construction Co for 6.43 trillion won in 2006.

Hyundai Motor Group said last month it plans to spend 10 trillion won to boost Hyundai Engineering’s sales to 55 trillion won by 2020 and to win orders worth 120 trillion won the same year.

Hyundai Motor Co had 7.9 trillion won of cash and assets equivalent to cash at the end of September, while Kia had another 2.02 trillion won, according to financial statements. Hyundai Mobis, the group’s auto-parts unit, had 1.85 trillion won of cash and cash equivalents.

Hyundai Group’s Hyundai -Merchant, Hyundai Securities and Hyundai Elevator have been selling shares and assets to raise cash for the Hyundai Engineering bid. Cash and cash equivalents at the three companies totaled 1.13 trillion won at the end of June.

Hyundai Merchant, South Korea’s second-largest shipping company, aims to raise about 400 billion won by selling 10.2 million new shares next month and 500 billion won in a commercial note sale. It is also selling a stake in a container terminal in Busan, the world’s fifth-busiest port, for about 200 billion won.

Hyundai Engineering said in February that it aims to boost overseas orders to US$12 billion this year from US$4.5 billion last year. Its net income climbed 22 percent to 456.6 billion won and sales rose 28 percent to 9.28 trillion won last year.

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