(Reuters) - Two groups split from what was South Korea's top conglomerate are squaring off in a bid for $2.5 billion-plus controlling stake in the country's biggest builder, Hyundai Engineering and Construction.
Korea Exchange Bank, the biggest shareholder of Hyundai Engineering & Construction, said on Friday it had received letters of intent from Hyundai Motor Group and a consortium led by Hyundai Group, the parent of Hyundai Merchant Marines.
The groups are headed by feuding members of the founding family of the original Hyundai group which was torn apart by family infighting.
In the bid for Hyundai Engineering & Construction Hyun Jeong-eun, a former housewife and the head of the present Hyundai Group will go head to head with Chung Mong-koo, the Hyundai founder's oldest surviving son, chairman of Hyundai Motor and the brother of Hyun's deceased husband.
Analysts said Hyundai Motor with its deep pockets was in a better position to win the race for Hyundai Engineering & Construction and that its acquisition would provide the builder with a strong support.
"If Hyundai Motor wins, Hyundai Engineering will have a new cash-rich owner that can provide synergies, such as assertive investments and stable supply of materials for construction," said Kang Seung-min, an analyst at NH Investment & Securities.
Hyundai Motor, the world's fifth-largest auto maker along with its affiliate, had a debt-to-equity ratio of just 55.1 percent as of June, less than one-fifth of the 300 percent ratio for Hyundai Merchant Marine, company data shows.
Hyundai Group has teamed up with Germany's M+W Group, a German engineering and project management firm, for its bid.
BofA Merrill Lynch and a domestic consortium of Korea Development Bank and Woori Investment & Securities are advising on the sale of the 35 percent stake.
Shares in Hyundai Engineering rose almost 3 percent on hopes for more bidders joining the auction, but finished the day down 1 percent, slightly underperforming the broad market's 0.2 percent gain.
A South Korean newspaper had reported early in the day that an unidentified Saudi conglomerate, owned by the Saudi royal family, would join the bidding.
The original Hyundai Group spearheaded South Korea's rise to Asia's fourth-largest economy from the rubble of a war in just over a generation, but has since been split into several groups after the death of its founder.
(Additional reporting by Hyunjoo Jin; Editing by Yoo Choonsik and Valerie Lee)