Hyundai Motor wins Kepco plot for 10.5 trillion won
Hyundai Motor was declared the winner yesterday in bidding to purchase the headquarters and properties of Korea Electric Power Corporation in Samseong-dong, southern Seoul. The company offered 10.5 trillion won (10.08 billion dollar), and it plans to build its new headquarters at the site. [NEWS1]
It bid 10.5 trillion won ($10.08 billion), far more than expected and more than double the bid of its chief rival Samsung Group for the 79,432-square-meter (19.6-acre) plot.
A total of 13 bids were submitted before the deadline Wednesday.
Hyundai will use the land to bring together many of its affiliates and also celebrate the Hyundai brand, as Volkswagen does at its headquarters in Wolfsburg, Germany.
Analysts had predicted that Kepco could get 4 trillion won to 5 trillion won at the most for the property in the heart of Gangnam, as its assessed value was slightly above 3 trillion won.
Samsung reportedly bid an amount above 4 trillion won.
The state-run electric power company stressed in a statement that the selection process was fair.
“As a public company, we have strictly followed the process and related legislation and centered our focus on preventing any controversy including accusations of special treatment or selling the property for far below its value,” Kepco said in a statement.
The company said a sales contract with Hyundai Motor will be made on Sept. 26 and the automobile conglomerate will pay in three installment over a year.
At the news, Kepco’s stock rose while Hyundai Motor’s tumbled.
Kepco shares rose 5.82 percent to close at 46,400 won. The power supplier’s shares, which started the day at 44,700 won, fell to 43,900 won around 10:30 a.m. when the announcement was made. But they quickly rose and even reached 47,150 won at 12:50 p.m.
Hyundai Motor shares tumbled 9.17 percent from the previous day to close at 198,000 won. This was the first time since June 17, 2013, that the automaker’s stock went below 200,000 won.
The Hyundai affiliates that participated in the bid in a consortium also saw their stocks fall. Kia Motors, the automaker’s main affiliate, saw its shares fall 7.8 percent to close at 54,400 won while Hyundai Mobis saw its shares decline nearly 7.9 percent to 22,000 won.
The biggest concern among investors was how the automaker will cough up the 10 trillion won.
But according to FnGuide, a financial information provider, Hyundai Motor’s in-house reserves as of last year were estimated at 111.7 trillion won and assets that could immediately liquidated into cash were estimated at 15.5 trillion won.
In fact, the purchase of the Kepco land is expected to save Hyundai Motor’s affiliates leases on various real estate properties, estimated at roughly 240 billion won a year.
The Korean automotive group said it will construct a global business center on the site.
“The global business center will be the symbol of the group’s future that foresees the next 100 years,” the statement said. “Through this we will raise the [nation’s] automotive industry as well as the nation’s brand value. We will contribute in vitalizing the nation’s economy by creating an economic effect by aggressively attracting foreigners and tourists to the automotive industry.”
The Kepco purchase is considered a first step in preparing for a new phase of development for the automotive group. Searching for a new headquarters has been one of its biggest priorities.
Although the main offices of Hyundai Motor and its main affiliate Kia Motors are located in Yangje, southern Gangnam, the conglomerate needed a wider area to gather affiliates spread across Seoul in one place. Hyundai has 18,000 employees working at 30 affiliates but only 5,000 or so from five affiliates work in Yangje.
Compared to other conglomerates located in downtown Seoul, or Samsung, which relocated most of its affiliates to the heart of Gangnam, Hyundai Motor’s headquarters in Yangje is on the edge of the outer rim of the capital.
In 2006, the conglomerate attempted to purchase a 32,548-square-meter plot in Ttukseom, just north of the Han River, but didn’t succeed. The automotive group was planning to build a 110-story global business center and invest 2 trillion won.
The automotive group is planning to create its own automotive landmark in the heart of Gangnam by benchmarking Volkswagen’s headquarters, Autostadt. The German company’s headquarters are used for production but the location also has a museum that displays a wide array of vehicles and demonstrates the latest technologies. It also hosts cultural events including concerts and Christmas markets. It’s considered one of the world’s biggest automotive theme parks and is a tourist destination.
One of the key attractions are the two glass towers where new Volkswagen vehicles are parked, waiting to be delivered to its owners. Roughly two million visitors are estimated to visit Autostadt.
According to officials at Autostadt, Hyundai Motor officials have frequently visited Wolfsburg.
On the Kepco land, Hyundai plans to build a convention center, automobile museum, performance center and even hotels.
The automobile company earlier estimated that when it creates its own Autostadt, it will be able to attract 100,000 foreign tourists.
Defeated rival bidder Samsung made no official comment yesterday.
Unlike Hyundai Motor, which aggressively trumpeted its interest in the Gangnam property, Samsung was oddly low-key. Until the last minute, many top officials remained silent about the bid.
Samsung was actually the first to take an interest in buying the property.
Although Samsung built a headquarters in the heart of Gangnam in Seocho-dong, which was completed in 2008, it had a plan in 2009 to create a Samsung complex that stretched from nearby Posco down to Kepco and the neighboring Korea Appraisal Board building. It was a joint plan with the steel company Posco and Samsung C&T.
BY LEE HO-JEONG [ojlee82@joongang.co.kr]
with the Korea JoongAng Daily
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