SEOUL, Jan 14, 2011 – Hyundai Motor signed an initial agreement Friday to buy a controlling stake in South Korea\’s largest builder, a key creditor said, following a bitter family feud over the former Hyundai empire.
The automaker had been selected as preferred bidder last week after a court ruled in favour of creditors, who scrapped an earlier deal to sell their 34.88 percent stake in Hyundai Engineering and Construction to the Hyundai Group.
The giant Hyundai empire was split into separate units after the death of its billionaire founder Chung Ju-Yung in 2001. The automaker headed by his second son and other units went their own way.
The construction firm came under creditor control in a debt-for-equity swap in 2001.
The residual Hyundai Group is headed by Hyun Jeong-Eun, a daughter-in-law of the late founder.
In mid-November it was named preferred bidder for the construction firm, topping a rival bid from Hyundai Motor.
But creditors eventually scrapped the deal, saying Hyundai Group failed to give enough information about how it would fund the multi-billion dollar purchase.
Key creditor Korea Exchange Bank said Hyundai Motor would start a due diligence survey of the builder next week. The bank hopes to complete the deal by April but gave no price details.
Yonhap news agency said the final price could be adjusted by plus or minus three percent from the 5.1 trillion won ($4.57 billion) originally offered by the automaker.
Hyundai Group — which includes a shipping firm, a brokerage, a tour company that operates projects in North Korea and an elevator maker — angrily rejected suggestions it could not afford the purchase.
It disclosed a new two trillion won fundraising plan.
But the Seoul Central District Court last week rejected the group\’s legal attempt to stop the creditors opening talks with other buyers.
Hyundai Motor, with affiliate Kia Motors, is now the world\’s fifth largest carmaker and better placed to fund the takeover.