Hyundai Motor Group has raised the stakes in its competition with Hyundai Group to acquire Korea’s top construction company.
Hyundai Motor said on Tuesday it will invest 10 trillion won ($8.9 billion US Dollar) in Hyundai Engineering & Construction by 2020 if it succeeds in taking a controlling stake in the company.
Under a blueprint to grow Hyundai Engineering & Construction into a leading global integrated engineering corporation, the investment will be directed to boosting its capacity for infrastructure development, plant construction, renewable energy and R&D, the world’s fifth-largest carmaker said.
It set a goal for Hyundai Engineering & Construction to achieve 120 trillion won in orders and 55 trillion won in sales for 2020.
The plan also envisions that the builder will diversify its business portfolio through stepping up its presence in fields such as harbor works, chemical engineering, water plant, road construction, residential buildings and real estate, Hyundai Motor said.
Shifting its business focus to higher value-added projects from heavily construction-centered operations, the company expects to expand its 90,000 labor force to around 410,000 by 2020.
“Hyundai Engineering & Construction will be our new growth engine to become a global general engineering company,” a Hyundai Motor official said. “We’ll gather our energies to strengthen the country’s capacity in high value-added construction.”
Hyundai Motor Group, parent of the country’s two largest auto companies, submitted last month its bid for a $2.5 billion stake in Hyundai Engineering & Construction. Hyundai Group is the other competitor.
The auto giant is run by Chung Mong-koo, the son of Hyundai Group founder Chung Ju-young. His elder brother’s widow, Hyun Jeong-eun, runs the current Hyundai Group.
In April, Hyundai Motor Group’s assets were valued at about 100.7 trillion won by the Fair Trade Commission, marking the country’s second largest conglomerate. The assets of Hyun’s Hyundai Group stood at about 12.4 trillion won.
Hyundai Engineering & Construction recorded revenues of nearly 9.3 trillion won and operating profits of 418.9 billion won last year.
The builder is considered to be the foundation of Chung Ju-young’s Hyundai Group, from which the current Hyundai Group and the carmaker were spun off.
The successful bidder will acquire 34.88 percent, or a little less than 39 million shares, with the price expected to settle at between 3.5 trillion won to 4 trillion won.
Korea Finance Corporation is currently the builder’s largest shareholder with 11.12 percent of shares.
By Shin Hyon-hee (firstname.lastname@example.org)