The clash over Hyundai Engineering and Construction between Hyundai Motor Group and Hyundai Group is spilling onto the public stage.
Hyundai Group, which is going head to head with Hyundai Motor Group as one of two companies that submitted letters of intent to Hyundai E&C’s creditors, has taken to newspaper and television advertising to argue its legitimacy and play down that of the auto giant in bidding for the construction company. The successful bidder will acquire 34.88 percent or a little less than 39 million shares, with prices expected to come in at between 3.5 trillion won ($3.1 billion) to 4 trillion won.
Hyundai Group is led by Hyun Jeong-eun, the widow of Hyundai Group founder Chung Ju-young’s third son Chung Mong-hun, while Hyundai Motor Group is headed by Chung Mong-koo, the late elder Chung’s eldest surviving son.
On Monday, major local dailies carried an advertisement from Hyundai Group that insinuates that Hyundai Motor Group should concentrate on the auto industry.
The advert contains a drawing of a sports car on top of which a phrase saying “expecting the world’s No. 1 automobile company” is written in bold.
In small print it goes on to pose the questions “why are international credit rating agencies concerned about a carmaker’s entry into the construction industry?” and “why do carmakers listen to their labor unions?” The latter referring to Hyundai Motor Co.’s union’s opposition to the company’s plans to acquire Hyundai Engineering & Construction, a deal expected to require up to 4 trillion won.
The advert finishes with the advice that by focusing on the auto industry, an auto brand envied by others could be born and with the phrase “Hyundai Group will guard the future of Hyundai E&C.”
This is not the first time Hyundai Group has used advertising as a tool to show its determination to acquire Hyundai Engineering & Construction.
In the run up to the submission of letter of intent for bidding for the construction firm, Hyundai Group television commercial that show pictures of Chung Ju-young and Chung Mong-hun, with the voice actor saying that Hyundai Engineering & Construction was “everything” to the two Chungs.
For Hyundai Group and Hyundai Motor Group, Hyundai Engineering & Construction possess more than financial value. In addition to being the country’s largest construction firm, whose revenues came in at nearly 9.3 trillion won and operating profits at 418.9 billion won last year, Hyundai E&C is often considered to be the foundations of Chung Ju-young’s Hyundai Group, from which the two conglomerates were spun off.
As such, the sale of Hyundai E&C has been as much a family affair as a major business deal right from the outset.
In July, reports of senior members of the Chung family meeting and promising support for Hyundai Motor Group’s acquisition attempt surfaced.
However, the report was quickly dismissed following the revelation that Rep. Chung Mong-joon, who was allegedly present at the meeting, was not in the country at the time of the supposed meeting.
Hyundai Motor Group, however, is taking the adverts in stride and says that it has no plans to retaliate.
“The group has no plans to response to the advertisements directly or in an emotional way,” a Hyundai Motor Group official said.
“Our plan is to prepare for and carry out the procedures required for acquiring Hyundai Engineering and Construction.”
By Choi He-suk (cheesuk@heraldm.com)
http://www.koreaherald.com/business/Detail.jsp?newsMLId=20101004000894
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