Hyundai E&C sale grabs investor attentio
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Investors appeared to be eyeing Hyundai Engineering and Construction with interest following the creditors’ announcement of the sale.
Boosted by the rising momentum, the construction firm’s stocks shot up during daytime trading, closing at 71,200 won on the Seoul bourse, up 3.19 percent from Monday. Analysts said they expected the rally to continue.
On Friday, Korea Exchange Bank, along with eight other financial institutions, issued an announcement of its intention to sell a 34.88 percent stake in the construction firm.
The bidders must submit letters of intent by Oct.1. The creditors hope to select a preferred bidder by the end of December.
The pending sale of Hyundai E&C would tie up some of the last remaining loose ends at Hyundai, which underwent a wide scope of restructuring and spin-offs starting in the 1990s amid the Asian financial crisis.
Hyundai Group and its former sister company Hyundai Motor Co. will now be neck and neck in the race to get back the construction arm.
Both firms have already expressed their intention to submit a bid by the deadline set by the creditors.
Hyundai E&C’s main attraction is its resurrection as a lucrative business its second quarter net profit was more than double the amount from last year but the group and automaker seemed also to be attached to the fact that the construction firm was once under the same Hyundai umbrella.
Hyundai Group recently sought to remind the public of its past ties with the construction company, via a commercial it aired over the Chuseok holidays featuring Hyundai Group founder Chung Ju-young and former group president Chung Mong-hun.
The group also claimed that its existing subsidaries in logistics and inter-Korean projects would help maximize the synergy effect with Hyundai E&C.
Protecting Hyundai Group Chairwoman Hyun Jeong-eun’s stake in Hyundai Merchant Marine, the group’s flagship affiliate, is another reason why Hyundai Group is determined to acquire Hyundai E&C.
Adding to Hyundai Group’s confidence in the upcoming bid is that it is now free from the obligation of redeeming maturing debt, and also may take out fresh loans.
Hyundai Motor, however, still appeared to have an inevitable edge in terms of liquidity.
As the country’s largest automobile manufacturer, Hyundai Motor reportedly has around 4.5 trillion won of liquid assets; the construction company is to cost around 3-4 trillion won.
Mindful of the potential synergy effect, Hyundai E&C has expressed wishes to be sold to a Hyundai affiliate.
Officials reportedly said they were concerned of the possibility of becoming the victim of a temporary investment scheme if they were tied up with a on-Hyundai parent firm.
But the construction company was cautious of showing preference to any of the affiliates, saying only that the tie-up should be with one that can maximize the synergy effect.
“Our only interest is to get back together with the firm capable of creating a maximum synergy effect,” said one source at the Hyundai builder who declined to be identified.
Established in 1947 by the late Chung, Hyundai E&C was spun off in 2001 and was put under the control of creditors following liquidity problems that erupted during the Asian financial crisis of 1997-98.
Hyundai Group currently has nine subsidiaries including Hyundai Merchant Marine, Hyundai Asan and Hyundai Elevator.
Hyundai Motor is headed by Chung Mong-koo, one of the late Hyundai Group founder’s sons.
By Kim Ji-hyun (jemmie@heraldm.com)
Boosted by the rising momentum, the construction firm’s stocks shot up during daytime trading, closing at 71,200 won on the Seoul bourse, up 3.19 percent from Monday. Analysts said they expected the rally to continue.
On Friday, Korea Exchange Bank, along with eight other financial institutions, issued an announcement of its intention to sell a 34.88 percent stake in the construction firm.
The bidders must submit letters of intent by Oct.1. The creditors hope to select a preferred bidder by the end of December.
The pending sale of Hyundai E&C would tie up some of the last remaining loose ends at Hyundai, which underwent a wide scope of restructuring and spin-offs starting in the 1990s amid the Asian financial crisis.
Hyundai Group and its former sister company Hyundai Motor Co. will now be neck and neck in the race to get back the construction arm.
Both firms have already expressed their intention to submit a bid by the deadline set by the creditors.
 |
| Hyundai Engineering & Construction headquarters (Yonhap News) |
Hyundai E&C’s main attraction is its resurrection as a lucrative business its second quarter net profit was more than double the amount from last year but the group and automaker seemed also to be attached to the fact that the construction firm was once under the same Hyundai umbrella.
Hyundai Group recently sought to remind the public of its past ties with the construction company, via a commercial it aired over the Chuseok holidays featuring Hyundai Group founder Chung Ju-young and former group president Chung Mong-hun.
The group also claimed that its existing subsidaries in logistics and inter-Korean projects would help maximize the synergy effect with Hyundai E&C.
Protecting Hyundai Group Chairwoman Hyun Jeong-eun’s stake in Hyundai Merchant Marine, the group’s flagship affiliate, is another reason why Hyundai Group is determined to acquire Hyundai E&C.
Adding to Hyundai Group’s confidence in the upcoming bid is that it is now free from the obligation of redeeming maturing debt, and also may take out fresh loans.
Hyundai Motor, however, still appeared to have an inevitable edge in terms of liquidity.
As the country’s largest automobile manufacturer, Hyundai Motor reportedly has around 4.5 trillion won of liquid assets; the construction company is to cost around 3-4 trillion won.
Mindful of the potential synergy effect, Hyundai E&C has expressed wishes to be sold to a Hyundai affiliate.
Officials reportedly said they were concerned of the possibility of becoming the victim of a temporary investment scheme if they were tied up with a on-Hyundai parent firm.
But the construction company was cautious of showing preference to any of the affiliates, saying only that the tie-up should be with one that can maximize the synergy effect.
“Our only interest is to get back together with the firm capable of creating a maximum synergy effect,” said one source at the Hyundai builder who declined to be identified.
Established in 1947 by the late Chung, Hyundai E&C was spun off in 2001 and was put under the control of creditors following liquidity problems that erupted during the Asian financial crisis of 1997-98.
Hyundai Group currently has nine subsidiaries including Hyundai Merchant Marine, Hyundai Asan and Hyundai Elevator.
Hyundai Motor is headed by Chung Mong-koo, one of the late Hyundai Group founder’s sons.
By Kim Ji-hyun (jemmie@heraldm.com)
Chuseok is a time to relax and enjoy the company of loved ones.
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