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SEOUL—Hyundai Heavy Industries Co., South Korea’s
third-biggest company by market value, agreed to acquire
stakes in two CJ Group financial units to help manage a
cash pile of more than 6 trillion won ($5.8 billion).
Hyundai
Heavy and unit Hyundai Mipo Dockyard Co. plan to buy 74
percent of CJ Investment & Securities Co. and 7.4
percent of CJ Asset Management Co., Ulsan, South
Korea-based Hyundai Heavy said in a regulatory filing
Friday, without giving a price. A formal offer letter
will be drawn up later, it added.
The deal
may help Hyundai Heavy, the world’s biggest shipyard,
and units Hyundai Mipo and Hyundai Samho Heavy
Industries Co. boost returns from cash assets built up
through four years of record earnings caused by surging
ship demand.
Hyundai
Heavy will also expand into offering corporate financial
services, such as advising on mergers and share sales.
“It make
sense since the three shipyards will be accumulating
more money in the coming years and need to manage the
assets more efficiently,” said Song Jae Hak, an analyst
at Woori Investment & Securities Co. in Seoul. “Also,
the takeover will help Hyundai Heavy move into the
financing business.” He rates Hyundai Heavy and Hyundai
Mipo a “buy.”
Hyundai
Heavy may pay about 800 billion won for the CJ Group
unit stakes, the Korea Economic Daily reported May 28.
The acquisition would be the first for Hyundai Heavy
since it bought Hyundai Samho, the world’s fifth-biggest
shipyard, for 100 billion won in 2002.
Hyundai
Heavy gained 0.9 percent to close at 375,000 won in
Seoul Friday. Hyundai Mipo, the world’s fourth-largest
shipbuilder, dropped 0.6 percent to 241,000 won. CJ
Corp., which owns 60 percent of CJ Investment, climbed
0.7 percent to 72,500 won.
Hyundai
Heavy follows Hyundai Motor Co. in joining South Korea’s
44.6- trillion won brokerage industry after regulators
lifted entry barriers last year to boost competition.
The shipyard may also expand into financial services
overseas following the deal, it said.
“We hope
to secure a business structure that will ensure stable
profit growth through this takeover,” Hyundai Heavy said
in a separate e-mailed statement Friday.
Hyundai Motor,
South Korea’s
largest automaker, and affiliates bought 30 percent of
Shinheung Securities Co. in March. The broker Friday
changed its name to HMC Investment Securities Co. STX
Group, parent of the world’s sixth-biggest shipyard,
failed to obtain approval to set up a brokerage earlier
this month.
Hyundai
Heavy boosted sales 20 percent to 5.94 trillion won in
the first four months of the year, achieving a third of
its full-year target. Its backlog for vessels and
offshore structures was $38.1 billion at the end of
April, representing almost four years’ work.
Last
year, the company more than doubled net income to 1.74
trillion won, with sales climbing 24 percent to 15.5
trillion won. Hyundai Mipo’s profit more than doubled to
529.2 billion won.
CJ Group
controls food processor CJ Cheiljedang Corp., retailer
CJ Home Shopping Corp. and CJ CGV Co., a cinema and
restaurant operator. CJ Corp. owned 60 percent of CJ
Investment, among the smallest investment firms in South
Korea, at the end of March. CJ Investment held 92
percent of CJ Asset.
CJ
Investment had a profit of 58.9 billion won in the nine
months ended December 31, compared with a loss of 63.2
billion won a year earlier. Revenue rose 26 percent to
186.7 billion won. (Bloomberg) |
