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Hyundai, Samsung bidding war over land reignites

August 21, 2015
Hyundai beat out Samsung in 2014 for the old KEPCO headquarters for 10.5 trillion won. (US$800 million). (Yonhap)

Hyundai beat out Samsung in 2014 for the old KEPCO headquarters for 10.5 trillion won (US$837 million). (Yonhap)

By Park Jin-hai

Hyundai Motor Group and Samsung Group are expected to enter the second round of competition to clinch a piece of land in southern Seoul.

The two have finished a review and will participate in a bid to buy the site, where Seoul Medical Center (SMC) was located. It is just 100 meters from land that Hyundai bought from Korea Electric Power Corp. (KEPCO) last year.

Hyundai and Samsung showed interest in that property, but Hyundai won the bid by offering 10.5 trillion won (US$837 million), three times the land’s appraised value.

Hyundai is developing the land into a mammoth complex accommodating its headquarters, a hotel, convention and entertainment facilities.

Hyundai previously said it was not interested in the SMC land, but given the possible synergy with the current building project, it seems to have changed its position.

This time, Hyundai E&C, Hyundai’s construction unit, will lead the bid.

“We have been considering the bid, although a final decision has not been made yet,” said Hyundai E&C CEO Jung Hyun-soo.

Samsung Group also is likely to enter a bid because the land is next to Samsung property. Samsung Life Insurance bought that land from the Korea Appraisal Board in 2011.

Samsung Life Insurance is said to be bidding for the land.

“At this moment, we cannot comment on the bid since every word can affect the price,” a Samsung group spokesperson said.

Seoul Metropolitan Government announced the bidding process on Aug. 11. It is accepting bids until Aug. 24.

The land has been valued at 972.5 billion won, according to the Korea Appraisal Board. But the industry believes bidding could see the price hit 2 trillion won.

Hyundai Motor Group, however, has remained cautious about the bid and made it clear that it is Hyundai E&C’s initiative. Hyundai Motor Group has been cash-strapped due to the building project, while Hyundai E&C has cash reserves of 4 trillion won.

“If Hyundai Motor’s core business units like Hyundai Motor, Kia Motors and Hyundai Mobis enter the bid, it could backfire,” said Shin Chung-kwan, an analyst at KB Investment & Securities. “Investors may raise their eyebrows, casting doubt on the group’s sincerity on shareholder-friendly policies. However, if it is Hyundai E&C, it will not be much of a problem.”

Hyundai Motor, after the purchase of the KEPCO site last year, has been hit hard by a nosediving share price and has struggled to earn back shareholder confidence, giving dividend increases and unprecedented mid-term dividends.