Sunday, March 27, 2011

Underdog Wins Hyundai Empire Battle

SEOUL — A takeover battle and family feud involving South Korea’s Hyundai empire ended Tuesday with the underdog bidder chosen as the winner, in a decision that ends its rival’s effort to bring back together the conglomerate that was split apart a decade ago.

Creditors of Hyundai Engineering & Construction Co. , South Korea’s largest construction company, chose Hyundai Group over Hyundai Motor Group to buy a 35% controlling stake, valued at around $2.6 billion.

Terms weren’t disclosed, but people close to the deal said Group offered just over $5 billion for E&C, topping Motor’s offer of just over $4 billion. …

If the deal goes through, it will likely make permanent the breakup of the Hyundai empire that happened in the 1990s and underscore that South Korea’s conglomerate era - in which huge collections of companies could be controlled by families with minority shareholdings - is nearing an end.

“Investors are worried that Hyundai Group, short of capital for the bid, will not be helpful for the builder’s future growth,” said Cho Yoon-ho at Daishin Securities.

The Hyundai Group affiliates’ shares were down sharply on the news. Hyundai Merchant Marine plunged 15%, while Hyundai Elevator was down 13.4%. Hyundai Engineering was off 15%. ?But Hyundai Motor was up 4.3% at 184,000 won.

Hyundai Motor Group’s consortium partner Kia Motors was off 1.9% at 48,850 won, while Hyundai Mobis was off 1.4% at 279,500 won, in line with Kospi’s 1.15 loss.

Hyundai Motor, with holdings that include the Hyundai and Kia auto makers, parts vendors, logistics firms, a steel company and a shipping line. Motor is led by Chung Mong-koo, the second son of founder Chung Ju-yung.

Hyundai Group is a collection of unrelated businesses in shipping, securities, elevator manufacturing and investments related to North Korea. Group is led by Hyun Jeong-eun, wife of the late Chung Mong-hun, the fifth son of Chung Ju-yung.

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