Hyundai E&C investors end talks with Hyundai Group

By Ju-min Park

SEOUL (BestGrowthStock) – Hyundai Engineering & Construction (000720.KS: ) shareholders were set to name Hyundai Motor Group (005380.KS: ) preferred bidder for South Korea’s largest builder, having ended talks on a 5.5 trillion won ($4.8 billion) takeover by Hyundai Group.

Leading Hyundai E&C shareholder Korea Exchange Bank (004940.KS: ) said on Monday E&C shareholders had voted to scrap a preliminary takeover agreement with shipping-focused Hyundai Group as it had failed to clarify financing plans.

KEB said shareholders would decide later whether to name Hyundai Motor Group as preferred bidder for E&C.

The battle for the flagship unit of the original Hyundai group before it was torn apart by a family feud in 2001 has rekindled a decade-long rivalry between members of the founding family of what was once South Korea’s biggest conglomerate.

Hyundai Group head Hyun Jeong-eun took on Hyundai Motor chairman Chung Mong-koo, the oldest surviving son of the founder of Hyundai and also the brother of Hyun’s dead husband.

Hyundai Group, which said the E&C shareholder decision was invalid, unexpectedly defeated cash-rich Hyundai Motor Group last month in a battle for E&C. Its offer of 5.5 trillion won was more than double E&C’s market value.

Its funding plans had been in doubt, with KEB having said on Friday E&C shareholders might name a new preferred bidder.

Before KEB’s statement on Monday, Hyundai Group announced a plan to raise about 2 trillion won in a rights issue via a group company to fund the purchase of the 35 percent stake in E&C.

“The rights issue, which will be part of our funding sources, is aimed at eradicating market fears over post-sale liquidity for both companies,” a Hyundai Group spokesperson said.

(Editing by Dan Lalor and Chris Lewis)

($1 = 1,153 won)

Hyundai E&C investors end talks with Hyundai Group