Bloomberg News

Hyundai Heavy Declines on Possible $2.4 Billion Hynix Bid

June 08, 2011

(Updates with closing share prices in second paragraph.)

June 8 (Bloomberg) -- Hyundai Heavy Industries Co., the world’s biggest shipyard, fell the most in two weeks after saying it may consider bidding for a $2.4 billion stake in Hynix Semiconductor Inc. being sold by former creditors.

“In principle, we are looking at this sale with interest,” the Ulsan, South Korea-based company said in an e- mailed response to queries today, without elaboration. Its shares dropped 5.6 percent to 466,000 won at the 3 p.m. close of trading in Seoul, the biggest decline since May 23. Hynix rose 1.1 percent.

A group of financial institutions led by Korea Exchange Bank has said it plans to sell a 15 percent stake in Hynix that it gained following a government-led bailout of chipmakers during the 1997-1998 Asian financial crisis. Buying the stake may cause Hyundai Heavy to invest in new technology while doing little to boost its main operations, said Lee Jae Won, an analyst at Tong Yang Securities Inc.

“It’s very hard to see why it would be interested,” said Seoul-based Lee. “It’s really unclear what the synergies would be.” The shipmaker may eventually decide against making a bid, he said.

Ichon, South Korea-based Hynix, the world’s second-largest computer-memory maker, has a market value of 17.1 trillion won ($15.8 billion), according to data compiled by Bloomberg.

One of Hynix’s forerunners and Hyundai Heavy were both part of the old Hyundai Group, which split up about 10 years ago.

Stake Sale

The nine financial institutions are still discussing ways to sell their stake and may announce the sale schedule by the end of this month, said Kim Sun Gyu, a spokesman for Korea Exchange. He declined to elaborate. Lee Si Hyun, a Seoul-based spokeswoman for Hynix, declined to comment.

The Korea Exchange-led group has spent $4.6 billion turning Hynix around since becoming shareholders by converting debt into equity. They have agreed to keep their holdings until at last the end of this year, Korea Finance Chief Executive Officer Ryu Jae Han said in October.

The government stepped in to help the nation’s chipmakers after losses caused by slowing sales, overcapacity and the Asian financial crisis.

--With assistance with Seonjin Cha in Seoul. Editors: Nicholas Wadhams, Dave McCombs

To contact the reporters on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net; Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editors responsible for this story: Neil Denslow at ndenslow@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net


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