Hyundai Directors Were Not Told About Size of Record $10bn Seoul Land Bid
Hyundai directors were not informed about size of record $10bn Seoul land bidReuters

Hyundai Motor and its affiliates did not obtain board clearance for their record $10bn (£6.1bn, €7.8bn) offer for a plot of land in Seoul's Gangnam district, according to a report from Reuters.

While the boards of Hyundai Motor, parts maker Hyundai Mobis, and Kia Motors discussed and approved bidding for the plot of land, the bid price was not shared with directors as it was deemed to be confidential.

The 79,342 square-metre site is located in the heart of the posh Gangnam district. The Hyundai-led group's offer tripled the property's assessed value.

Cash-rich Hyundai intends to build a headquarters complex, an automobile theme park, and a hotel on the land, which currently houses Korea Electric Power's (Kepco) headquarters.

Kim Sang-jo, executive director of Solidarity for Economic Reform, an advocacy organisation for better corporate governance, told the news agency that his group will ask the firms for minutes of their board meetings to ascertain whether there was sufficient discussion on the purchase.

Kim said: "Hyundai made a nonsensical, reckless decision because they did not take into account shareholders."

Meanwhile, a Hyundai Motor spokesman said: "There are always meetings with investors, and we are ready to fully answer questions from investors regarding this matter. We would like to say that there has been a need to construct an integrated company building for a long time."

Earlier, Hyundai said in a statement: "[The planned global business center] will raise the brand value of the automobile industry and the country, and contribute to revitalizing the national economy by actively attracting foreigners and tourists."

Hyundai Motor and its affiliates together lost nearly $8bn (£4.9bn, €6.2bn) in market value on 18 September as news about land purchase rattled shareholders.

The trio outbid Samsung Electronics for the land.

Hyundai Motor Group's 10 listed firms, excluding financial firms, had 42.8tn won ($48.9bn, €31.9bn, £25.1bn) in cash and equivalent at the end of the Q1 2014, according to public filings compiled by data consultant CEO Score.