Hyundai Motor Group to join race for Hyundai Engineering M&A
- Source: Xinhua
- [08:33 September 28 2010]
- Comments
South Korea's top auto company Hyundai Motor Group on Monday announced its intention to bid for a majority stake in Hyundai Engineering & Construction Co., likely to face its former parent Hyundai Group as a rival.
"Hyundai Motor Group will place a bid for Hyundai Engineering in an effort to strengthen the group's new growth engine and boost business synergy," the group said in a statement, adding it will submit a letter of intent later in the day.
The group, well-known for its abundant liquidity, said it will not rely on outside funding for the bid.
Creditors of Hyundai Engineering on Friday officially announced that they will put South Korea's No. 1 builder up for sale, seeking to unload a total of 34.88 percent stake.
The creditors, led by the Korea Exchange Bank (KEB), acquired the company in 2001 through a debt-to-equity swap as the company was on the verge of insolvency.
Amidst the creditors seeking to pick a preferred bidder by the end of 2010, market observers are anticipating a tug-of-war between two business groups that once belonged together under the control of ex-Hyundai Group owner Chung Joo-young.
Hyundai Motor Group, run by Chung's eldest son Chung Mong-koo, is expected to fight against Hyundai Group, controlled by his brother's widow Hyun Jeong-eun.
Hyundai Motor Group was separated from Hyundai Group a decade ago as a result of the so-called war of princes, which was a cutthroat competition between former owner's sons to take the chairman post.
Hyundai Group is now the parent group of leading shipper Hyundai Merchant Marine Co. and Hyundai Asan Corp.
Upon the announcement, Hyundai Group expressed regrets that Hyundai Motor decided to take part in the bidding race.
"It is a pity Hyundai Motor is trying to acquire Hyundai Engineering now that it has been put back into a normal state," Hyundai Group said in a statement, adding that it avoided the company when it was in trouble.
The local market welcomed the report, shares of Hyundai Engineering closed at 74,700 won ($65), soaring 4.92 percent from the previous session.
Hyundai Motor's shares, on the other hand, ended flat at 161, 500 won ($141).
