AIG, Hyundai Accord Delayed Until March

The obstacles separating the consortium led by American International Group and South Korea’s Hyundai Securities have proven more intractable than anticipated, preventing the groups from concluding their long running negotiations for the acquisition of Hyundai and two investment units by the end of the year. The new closure date has been moved up to March 2002.

So far AIG has dropped its demands for higher dividends on its preferred shares, and a proposal to convert the shares to common stock within a year, but has maintained its offer at the original price of around $5.30 cents a share, a total investment of $875 million.

The South Korean government has agreed to provide increased capital to Hyundai Securities, the country’s third largest securities broker, of around $685 million, but other issues have yet to be resolved. Minority shareholders are also challenging the deal as unfair to their interests, and have begun several court actions in an attempt to prevent it, or to obtain more favorable treatment.

It’s unclear exactly what details are preventing the completion of the deal, as neither side has chosen to comment on them, but both have said that they expect negotiations to eventually reach a successful conclusion.