South Korea's top auto manufacturer Hyundai Motor Group said that it will bid for a major stake in Hyundai Engineering & Construction Co, the country's top builder put up for sale.
Creditor banks of Hyundai Engineering & Construction said that they will sell a 34.88% stake in the construction firm, which they acquired through a debt for equity swap in 2001 to save the builder from insolvency.
Hyundai Motor Group said that "It will place a bid for Hyundai Engineering in an effort to strengthen the group's new growth engine and boost business synergy."
The group, which includes top automaker Hyundai Motor Co and Kia Motors Corporation, plans to submit a letter of intent later in the day.
The creditors are seeking to pick a preferred bidder and complete the deal by the end of this year, which could fetch between KRW 3 trillion and KRW 4 trillion.
Cash abundant Hyundai Motor Group said that it plans to bid for Hyundai Engineering without relying on outside funding. The group also noted that it is not considering merging with its unlisted builder, Hyundai Amco, if it acquires Hyundai Engineering.
Hyundai Motor Group is expected to face Hyundai Group, the former parent company of the builder, in what market watchers say is a bidding race among Hyundai families.
Hyundai Motor Group, led by Mr Chung Mong koo, was separated from Hyundai Group a decade ago. Hyundai Group, the parent group of leading shipper Hyundai Merchant Marine Co and Hyundai Asan Corporation, is controlled by his brother's widow Ms Hyun Jeong eun.
The creditors have been looking for a new owner for the construction firm since 2006 when it ended a creditor led debt rescheduling program, but the onset of the global financial crisis in late 2008 has hampered their search. They plan to close bidding by November 12th 2010 and accept letters of intent until October 1st 2010.