Hyundai Accepts AIG’s Price – Deal Set to Proceed

September 10, 2001

The long delayed deal between Korea’s Hyundai Securities and an investment consortium headed by American International Group and W.L. Ross & Co. (See IJ Website Aug. 24 and Sept. 4) now looks set to proceed as officials of Korea’s second largest securities firm accepted AIG’s demand that its group acquire newly issued preferred shares for 7000 won ($5.44).

AIG’s offer to acquire Hyundai Securities, and two other troubled financial units from Hyundai, has been held up for over two weeks when company officials demanded a higher price for the shares than AIG had agreed to pay. At one point it threatened to walk away from the deal, which has been in negotiations for over a year, if no agreement could be reached.

The investment group is seeking to obtain at least 33.33 percent control over the company, and refused to pay the higher price in order to acquire the requisite number of shares.

Hyundai’s acceptance of the original figure removes the last barrier blocking agreement. AIG will invest an additional $310 million in Hyundai Securities and around $543 million in Hyundai Investment Trust and Securities and Hyundai Investment Trust management. The Korean government has also agreed to make additional investments in the Hyundai units.

Eventually AIG hopes to market its insurance and financial products through Hyundai Securities 245 branch offices throughout Korea.

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