Hyundai Motor Group's two construction affiliates, Hyundai Amco and Hyundai Engineering, are scheduled for merging into a single entity this April 1, 2014.
The merger is expected to reshape the construction and engineering industry, as the entity that will be a new, competitive player in the market.
The Hyundai Amco and Hyundai Engineering, respective boards' have decided on the merger during respective meetings and ended up this final decision.
Hyundai Engineering will take over Hyundai Amco, as the former's stock price is higher than the latter's and it has twice as many workers. The two firms are still unlisted.
Hyundai Amco was set up in 2002 for construction and expansion of the group's manufacturing facilities and research institutes. It ranked 13th among construction firms here in construction capacity.
Hyundai Engineering is a member of Hyundai Engineering and Construction Group which holds a 75-percent stake in the former. It specializes in plant construction. Both HEC and HDEC are part and under the umbrella of Hyundai Motors Group.
The merger is part of the group's strategy to expand its construction business,.
"By developing more competitiveness and expertise in plant construction, we aim to make the single entity one of the world's top 10 engineering companies by 2025, with 20 trillion won in sales," this is our goal.
The combined sales of the two firms were 6 trillion won last year, and the combined assets were 4 trillion won. The new entity will rank 10th in terms of construction capacity and eighth in terms of sales.
The merger will create a considerable synergy as the two firms have specialties in different businesses ― while Hyundai Amco focuses on construction of buildings, roads, ports and houses, Hyundai Engineering is good at planning and constructing petrochemical and electric power plants.
"Through the merger, the single company will have a diverse portfolio ranging from industrial plants to housing and civil engineering. It will have an advantage in winning construction bids in both domestic and overseas projects with a combination of Hyundai Engineering's planning capacity and Amco's construction ability".
The new firm's business will be expanded to oil and gas plant construction, Hyundai Engineering & Construction (HDEC)'s business in the field may be transferred to the new company.
[ Hyundai Amco/ Hyundai Engineering]