Hyundai Group signs initial take over deal

November 29, 2010

, SEOUL, Nov 29 – The Hyundai Group led by Hyun Jeong-Eun signed an initial deal Monday to take over South Korea\’s largest builder, after trumping a rival bid from car giant Hyundai Motor headed by her brother-in-law.

Korea Exchange Bank (KEB), lead creditor of Hyundai Engineering and Construction, said the final contract is likely to be signed in January.

The takeover battle is part of a family feud over the former Hyundai empire, which was split into separate units after the death of its billionaire founder Chung Ju-Yung in 2001.

Hyundai Motor was hived off almost a decade ago as a separate entity.

With affiliate Kia Motors, it is now the world\’s fifth largest carmaker and was far better placed to fund the purchase of the construction firm — which came under creditor control in a debt-for-equity swap in 2001.

However creditors this month chose Hyundai Group over the automaker to buy a 35 percent stake in the builder for an undisclosed sum.

Dow Jones Newswires quoted people familiar with the matter as saying Hyundai Group offered just over five billion dollars, compared with Hyundai Motor\’s bid of just over four billion.

Hyundai Group — which includes a shipping firm, a brokerage, a tour company that operates projects in North Korea and an elevator maker — is disputing suggestions it cannot afford the deal.

On Monday it filed a 50 billion won (43 million dollar) lawsuit against Hyundai Motor over its allegations that Hyun\’s group may have funding trouble.

Hyundai Motor has raised "groundless doubts and leaked such allegations to the media and politicians, which is a clear violation of rules that ban such activities", Hyundai Group said in a statement Sunday.

Hyundai Motor responded Monday by saying creditors should not grant its rival the status of preferred bidder without clarifying its funding plan.

Given market concerns over the Hyundai Group\’s funding capacity, creditors will be able to deprive it of the status of prime bidder if anything unlawful is found in the process, KEB said in a statement.

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