SEOUL: Hyundai Motor and two listed affiliates did not seek board clearance for the size of their record $10bn bid for a plot of land in Seoul, more than triple its appraised value, four board members of the companies said.
Thursday’s winning bid for the land sent shares in Hyundai Motor, Kia Motors and Hyundai Mobis plunging, wiping out $8bn in shareholder value, and sparked howls of protest from investors, rekindling worries about corporate governance at South Korea’s conglomerates, or chaebol.
While boards of the three firms discussed and approved bidding for the plot in the capital’s high-end Gangnam district to house a headquarters complex, hotel and automotive theme park, the bid price was not shared with directors as it was deemed to be confidential, three of the directors said.
The Hyundai Motor and Kia Motors boards unanimously approved making a bid for the KEPCO land, two directors said. “The price was top secret, so it was not something we discussed at the meeting,” said one. “The intangible benefits go beyond the appraisal price of the land.” Another director said its board heard and discussed information about the appraisal price of the KEPCO land and the value of nearby buildings. “Hyundai has many grand ideas around the KEPCO land,” he said.
“I think it’s worth it,” he said.
Hyundai Motor, headed by 76-year-old Chung Mong-koo, declined to comment on board level decision-making behind its bid, and also said it had not yet decided how the purchase price would be divided among the three companies.
In sealed bidding, Hyundai Motor Group won the auction by a “a wide margin”, said an official with the seller, KEPCO. The other bidder, Samsung Electronics, has not said how much it bid, but media reports put it in the $4-$5bn range.
Hyundai had long made clear it coveted the 79,342 sqm site, the last big piece of land available for development in the prestigious southern Gangnam district. Reuters
