Hyundai, AIG agree to Korea's biggest investment deal
Hyundai, AIG agree to Korea's biggest investment deal
SEOUL (Reuters): Hyundai Securities has resolved a dispute with American International Group (AIG) over the sale price of its new shares, paving the way for South Korea's biggest foreign investment deal.
The Korean brokerage said on Sunday it had decided to sell its new preferred shares for 7,000 won (US$5.44) each to a consortium led by insurance giant AIG.
The U.S. insurer, which tentatively agreed last month to pay 1.1 trillion won for control of Hyundai Securities and two ailing financial units, had threatened to cancel the deal unless its price demand was met.
"Our chief executive officers met late on Saturday and decided to accept AIG's demand to sell shares at 7,000 won," said a senior Hyundai Securities official who declined to be identified. The final agreement will be signed by October.
Hyundai had insisted on selling its shares at 8,940 won adding that any price change was impossible.
The official did not say why Hyundai decided to give in to AIG's demand.
Due to differences in prices and other terms of agreement, AIG has been haggling for more than a year to complete the deal, which would give it access to 245 financial branches.
Under the pact AIG would invest 400 billion won in Hyundai Securities and the remaining 700 billion won to two ailing Hyundai units -- Hyundai Investment Trust and Securities and Hyundai Investment Trust and Management.
The Korean government, which is trying to pump new blood into the country's ailing industries, will also invest 900 billion won to smoothen out the sale.
AIG officials were not immediately available for comment.
AIG leads a consortium of 25 entities invested in funds managed by Wilbur Ross, chairman of private investment firm W.L. Ross & Co.
The investors include California Public Employees' Retirement System, General Electric Co's GE Capital, State of Wisconsin Investment Board and TransAmerica Corp, a unit of Dutch insurer Aegon NV
South Korea is also in talks with U.S. auto giant General Motor to sell the bankrupt Daewoo Motor. Media reports said GM was ready to pay nearly $782 million to buy two Daewoo plants but not its largest and oldest plant.
U.S. based investment fund Newbridge Capital took over the insolvent Korea First Bank in 1999 for 500 billion won.