Hyundai to pay for $10B Gangnam site with cash

Home > Business > Industry

print dictionary print

Hyundai to pay for $10B Gangnam site with cash


Hyundai Motor and its two affiliates will use cash to fund their 10.6 trillion won ($10 billion) purchase of land in Gangnam District, southern Seoul, raising concern that the companies will reduce shareholder payouts.

Hyundai Motor, Hyundai Mobis and Kia Motors won’t issue debt to fund the purchase, the Seoul-based company said in an email on behalf of the consortium. The automaker will build its new global headquarters at the site.

The decision to use cash will damp investor optimism that Korea’s largest automaking group will increase their dividend payouts. The government had announced plans in August to encourage businesses to increase wages and dividends by levying a 10 percent punitive tax on corporate cash hoards. The three companies have lost more than $16 billion in combined market value since the Hyundai-led group won the land auction after offering triple the assessed value.

“We had hopes for a higher dividend but those hopes are all gone,” said Heo Pil-seok, CEO at Midas International Asset Management, which oversees $10 billion. “The three companies involved in the property purchase hold enough cash to fund the deal and therefore it won’t have an impact on the companies’ credit ratings.”

The three companies had cash, near cash and short-term investments amounting to about $38 billion at the end of June.

Hyundai will pay 55 percent of the total, followed by Hyundai Mobis with 25 percent and Kia Motors footing the rest.

Bloomberg



More in Industry

Bus voyage

Shake Shack discovers gochujang

Celltrion plans merger, holding company transition

Soaring iron ore prices batter Korea's steelmakers

BTS among performers at Lotte Duty Free 40th anniversary concert

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now