The board members of Hyundai Motor and two of its affiliates agreed to pay 10.55 trillion Korean won (£6.2 billion) for a plot of land to build their new headquarters in Seoul, it was announced today (September 26th).
The company, along with Kia Motors Corp and Hyundai Mobis Co, is spending more than triple the assessed value. Hyundai Motor will pay 55 per cent of the price, followed by Hyundai Mobis Co Ltd with 25 percent and Kia Motors Corp with 20 per cent, the companies said.
This has caused concerns among investors as it exceeds Hyundai Motor’s entire 2013 earnings. Ko Tae-bong, auto analyst at HI Investment & Securities told Reuters: "This deal is going to take a huge chunk out of Hyundai's vault, and dipping their hands into a cash stash that could have otherwise been used for higher dividend payouts and R&D is going to aggravate many investors, especially foreigners."
About 11.6 trillion won have been wiped of the market values of the companies since the purchase was announced last week, according to Reuters.
Shares of Hyundai Motor ended down 1.3 per cent at 187,000 won each today, their lowest level in 17 months. Kia Motors edged down 0.8 per cent, and Hyundai Mobis was up 0.6 per cent.
"Building an integrated control tower will enhance work efficiency and brand value," Hyundai Motor said in its regulatory filing on Friday.
Labour union employees voted today to extend a strike into next week in a show of disapproval of the purchase of a land parcel.
The 47,000 union members of the auto maker's 60,000-strong work force stopped work for four hours, and planned further strikes this week after talks with management on wages and benefits broke down, said a union spokesman.
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