Seoul: A group led by Hyundai Motor was chosen as the preferred bidder for South Korea’s top builder Hyundai Engineering & Construction, a major E&C shareholder said.
South Korea’s top automaker was expected to beat rival bidder Hyundai Group in a contentious takeover tussle, after a court rejected Hyundai Group’s request to block talks between E&C shareholders and Hyundai Motor.
E&C shareholders are expected to sign a memorandum of understanding with Hyundai Motor next week and clinch the deal by April, Korea Exchange Bank said in a statement on Friday.
Before the announcement, Hyundai Motor shares ended at a record high as the court decision removed uncertainty surrounding the deal, analysts said.
Although some investors have doubts over synergies from the combination of the automaker and builder, this is not expected to undermine their bullish outlook for Hyundai as new models and the favourable currency help the carmaker to outperform in the global auto market.
E&C was the flagship unit of the original Hyundai group torn apart by a family feud in 2001. Rival family members have been locked in an acrimonious battle to acquire control of E&C in a deal whose value will reach more than $4 billion.
Hyundai Group was unexpectedly named preferred bidder in November after outbidding Hyundai Motor with a 5.5 trillion won ($4.9 billion) offer for the 35% stake in E&C.
Hyundai Motor had offered around 5.1 trillion won. But E&C shareholders scrapped the preliminary agreement with the shipping-focused underdog for failing to clarify its funding plans.
Hyundai Group, whose flagship unit is Hyundai Merchant Marine, said it would appeal to a higher court.