Hyundai Group bid for a stake in Hyundai Engineering & Construction Co. worth $2.5 billion, setting up a competition with Hyundai Motor Group for control of South Korea’s largest builder.
Hyundai Group wants the stake to help expand globally, it said today in a preliminary bid statement. Hyundai Motor Group, owner of South Korea’s largest automaker, submitted its proposal on Sept. 27. Neither group said how much they would offer for the holding.
Hyundai Group’s letter of intent is the latest round in a decade-long feud splitting one of South Korea’s most powerful families. Hyundai Group Chairwoman Hyun Jeong Eun is trying to rebuild after family infighting, bad debts and an ill-fated effort to expand into North Korea splintered the industrial empire. Her billionaire brother-in-law, Chung Mong Koo, the Hyundai founder’s eldest surviving son and chairman of Hyundai Motor Co., is competing against her to expand his group.
Buying Hyundai Engineering would also help Hyun maintain control of Hyundai Group’s biggest unit, Hyundai Merchant Marine Co., which is 8.3 percent owned by the construction company. Hyundai Merchant, which contributed 58 percent of Hyundai Group’s sales, last year, is the biggest shareholder in 7 of the 12 Hyundai Group units.
Korea Exchange Bank, the main creditor bank for Hyundai Engineering, confirmed in a statement today that only the two companies had submitted their proposals.
The builder dropped 1 percent to close at 71,800 won in Seoul trading. Hyundai Merchant fell 7.6 percent to 46,850 won.
Hyundai Engineering, based in Seoul, was taken over by creditors in 2001 as debt mounted after it couldn’t collect payment for overseas projects. The company said in February it aims to win $12 billion worth of foreign orders this year, compared with $4.5 billion in 2009.
Bank of America Corp.’s Merrill Lynch & Co., Woori Investment & Securities Co. and Korea Development Bank are arranging the sale.0
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