* Hyundai Group consortium picked as preferred bidder -source
* Buyer Hyundai Merchant shrs fall 12 pct on finance worries
* Hyundai E&C shares slump 15 pct
* Hyundai reportedly offered around $4.5 bln for 35 pct stake
SEOUL, Nov 16 - A consortium led by Hyundai Group has been named preferred bidder for a $2.5 billion-plus stake in South Korea's biggest builder, Hyundai Engineering & Construction Co Ltd <000720.KS>, its top shareholder said on Tuesday.
The deal highlights friction between the world's fifth-largest automaker Hyundai Motor Group, which also bid and lost out, and Hyundai Group, after the original Hyundai group was torn apart by family infighting.
"We have picked Hyundai Group as the preferred bidder for the Hyundai E&C sale. We will announce the bidder at a news conference at 11 a.m.," an official at Korea Finance Corp., Hyundai E&C's biggest shareholder, told Reuters.
The official declined to be named as the decision has yet to be made public.
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 in 2001.
Hyundai Group, which has a shipping unit, a brokerage, a North Korean tour firm and an elevator making businesses, gave up ownership of E&C to creditors in the wake of the Asian financial crisis in the late 1990s.
Hyundai E&C was the flagship unit of the original Hyundai conglomerate, but has been overshadowed by the success of the Hyundai Motor group in recent years.
Shares of Hyundai Merchant Marine <011200.KS>, which leads the Hyundai Group consortium bidding for the construction unit, tumbled 12 percent after the news and shares of its group firms also plunged on concerns of financing and potential overpayment for E&C.
Hyundai Elevator <017800.KS> dropped 10 percent and Hyundai Securities <003450.KS> fell 6 percent.
"Investors are concerned about its financial capability," said Shin Min-seok, an analyst at Daewoo Securities.
Shares in Hyundai E&C slumped 15 percent on the news.
Media reports have said Hyundai Group may have offered at least 4.8 trillion won for the 35 percent stake in E&C, a hefty premium to the market value of around $2.5 billion.
Both Hyundai and shareholders declined to reveal value of the deal.
"Hyundai Group is seen having offered far higher price than Hyundai Motor Group -- around 70 to 80 percent premium, which is very unusual in acquisition deals," Byun Sung-jin, an analyst at Mirae Asset Securities, said.
From Yahoo news Asia.
(Reporting by Hyunjoo Jin and Ju-min Park; Editing by Lincoln Feast)