Hyundai Motor, South Korea’s largest automaker, has won the bid for Korea Electric Power Corp.’s office property in the affluent Gangnam district of Seoul, the state-run power distributor said.
KEPCO said Hyundai Motor’s consortium offered the highest bid of 10.5 trillion won ($10 billion) for its 80,000-square-meter site, beating rival bidder Samsung Electronics. The consortium consisted of Hyundai Motor’s affiliates Kia Motors and Hyundai Mobis.
Hyundai Motor welcomed the announcement, saying that it would have no problems financing the redevelopment of the KEPCO property with the construction of a global business control tower.
The building is to house some 30 of its affiliates and subsidiaries. The group plans to collect total rent of 240 billion won a year from its affiliates.
“This will help us make a second leap in Gangnam,” said a Hyundai Motor official.
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KEPCO’s office in southern Seoul. (Yonhap) |
The planned land purchase will allow Hyundai Motor to produce 10 million cars globally in the long term, it added.
The world’s fifth-largest automaker said it would share costs with its 30 companies over the next eight years to rebuild the site in line with its plan to vertically integrate its units under one roof.
The land acquisition would be financed separately from the redevelopment, said Hyundai Motor, which has cash and cash equivalents of over 7 trillion won as of the end of June.
The carmaker noted that the value of property in Gangnam has consistently risen by about 9 percent on average over the last decade, despite external variables such as the global financial crisis.
Therefore, it said, the investment is expected to pay off for the company over the next 10 to 20 years.
KEPCO is selling the property, whose market value was estimated at around 3.3 trillion won, to reduce debt. It aims to cut its debt by almost 15 trillion won over the next two years.
It also had to sell the land as the power company is relocating to Naju, South Jeolla Province, later this year as part of the government’s balanced regional development plan.
The two sides will sign a contract on Sept. 26 to have Hyundai Motor pay for the land in phases within a year, KEPCO said in a press release.
Hyundai Motor had expressed interest in buying the land to accommodate its growing workforce and businesses at its current headquarters in Yangjae-dong in southern Seoul.
By Park Hyong-ki and Bae Ji-sook
(
hkp@heraldcorp.com) (
baejisook@heraldcorp.com)
