Hyundai Securities of South Korea said Monday that it had extended a deadline for selling shares in it and two affiliates to a consortium led by American International Group.
Negotiations to take over the financial companies of Hyundai Group, once South Korea's largest conglomerate, have gone on for a year and a half.
A deal would result in the largest foreign investment in the South Korean financial services sector.
A Hyundai Securities official gave no reason on Monday for the impasse.
Although the two sides have signed a memorandum of understanding, negotiators have balked on the issue of the value of the shares.
Their tentative agreement calls for the consortium to pay more than US$800 million to acquire control of all three companies, including Hyundai Securities, Hyundai Investment Trust and Securities, and Hyundai Investment Trust Management.
A group advocating shareholders' rights has threatened legal action if the board of Hyundai Securities sells shares at a significant discount, as it has promised to do. The price set by the board, according to the group, is nearly half the current listed price for Hyundai Securities.
The negotiations between AIG, which is based in New York and is the world's largest insurance company, and Hyundai Securities come amid questions about South Korea's openness to foreign investment.
The talks are one of three crucial negotiations with large Western giants that have now dragged into the new year, disappointing investors who had hoped for deals in December.
The others are talks on the takeover of Daewoo Motors by General Motors and on a possible alliance of Hynix Semiconductor and Micron Technology.
Hopes are still high for Daewoo Motors and General Motors to reach an agreement in January, despite protests by workers demanding job security. At the same time, Hynix and Micron have edged toward a strategic alliance that might include a takeover by Micron of Hynix's memory chip production.
The common denominator in all the talks is the breakdown of the huge chaebol or conglomerates that controlled Hyundai Securities, Hynix and Daewoo Motor before South Korea's financial crisis in 1997 and 1998 brought them to the brink of collapse.
The IMF, which pieced together a US$58 billion bailout plan for the Korean economy in December 1997, has reportedly urged the creditor institutions that now own Daewoo Motor and Hynix to step up efforts to dispose of them.
The fund cited a welter of laws and regulations that have kept major companies on life support while impeding negotiations for selling them to foreign investors.
The troubles at Hyundai Securities resulted largely from the failure of Daewoo Group in mid-1999 that also brought about the bankruptcy of Daewoo Motor, whose debts are estimated at about US$16 billion.
Hynix Semiconductor, formerly Hyundai Electronics, has accumulated debts of US$8 billion since taking over the semiconductor division of LG Electronics under government pressure during the country's prolonged economic crisis.
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