October 20, 2010
Hyundai Motor Group, Korea’s top automaker, said yesterday that it plans to invest 10 trillion won ($8.9 billion) in Hyundai Engineering & Construction Co. over the next 10 years if it succeeds in its bid to take over the country’s largest builder.
Hyundai Motor made the offer as it competes against the Hyundai Group for a controlling stake of 35 percent in Hyundai Engineering & Construction from creditors.
It was the first concrete plan laid out by Hyundai Motor, which until now has allowed Hyundai Group to take the lead in a publicity campaign criticizing the automaker’s ambitions.
The creditors, led by Korea Exchange Bank, will receive final bids by Nov. 12 and hope to complete the sale by the end of this year, with the stake valued at between 3 trillion won and 4 trillion won.
Hyundai Motor, which has much larger cash reserves than Hyundai Group, said its planned investment will help boost sales five-fold over the next decade. It has set several targets for Hyundai Engineering & Construction, including sales of 55 trillion won and an order book worth 120 trillion won by 2020. The builder’s sales are expected to amount to 10 trillion won this year, with the amount of new orders totaling 20 trillion won.
“We will be developing Hyundai Engineering & Construction as a global engineering company through active market development, enhanced business models and expansion of value-added products,” Hyundai Motor said. It also plans to increase the building firm’s workforce from 90,000 now to 410,000 by 2020.
By Lee Eun-joo [firstname.lastname@example.org]