Jan. 14 (Bloomberg) -- Hyundai Motor Group signed a preliminary agreement to buy a controlling stake in South Korea’s biggest builder as Chairman Chung Mong Koo seeks to run what was his father’s flagship company.
The automaker will begin due diligence on the Hyundai Engineering & Construction Co. deal next week, Korea Exchange Bank, one of the investors selling shares, said today in an e-mailed statement. The shareholders have said they plan to complete the deal by April.
Hyundai Motor Group intends to invest 10 trillion won ($9 billion) in the builder to help it boost sales fivefold by 2020. Chung competed with his sister-in-law Hyun Jeong Eun’s Hyundai Group for the 35 percent stake, extending a decade-long feud in one of South Korea’s richest families.
The automaker bid about 5.1 trillion won for the stake, about 410 billion won less than Hyundai Group’s offer, according to comments made by Judge Choi Sung Joon at a Dec. 24 court hearing. Hyundai Group’s attempt to buy the builder collapsed because of concerns about how it would pay for the deal.
Hyundai Engineering gained 2.9 percent to close at 88,300 won in Seoul trading before the announcement. Hyundai Motor Co., South Korea’s largest automaker and a unit of Hyundai Motor Group, rose 4.4 percent to 200,500 won.
The Hyundai Engineering stake is being sold by ex-creditors who seized control of the builder in 2001 as it struggled with debts.
Hyundai Motor Group split off from the main Hyundai Group in 2000, after Chung was snubbed as heir by his father in favor of his younger brother and Hyun’s husband, Chung Mong Hun. Hyun took control of Hyundai Group after her husband committed suicide in 2003.
To contact the editor responsible for this story: Neil Denslow at email@example.com