Hyundai shares down after €8bn land deal

Hyundai Motors and its two affiliates yesterday approved Asia’s biggest property deal since the financial crisis when their board members agreed to pay €7.96bn ($10.12bn) for a trophy plot of land to house a new headquarters in downtown Seoul.

The Hyundai-led group — which includes Kia Motors and Hyundai Mobis — agreed to the price, more than triple the appraised amount, prompting a sharp sell-off in the companies’ shares.

About 11.6 trillion Korean won ($11.11bn) have been wiped of the market values of the companies since the purchase was announced last week.

Labour union employees, who make up the bulk of the companies’ workforce, voted to extend a strike into next week in show of disapproval of the purchase which will be used to house a new headquarters, hotel and theme park complex.

“Building an integrated control tower will enhance work efficiency and brand value,” Hyundai Motors said in its regulatory filing yesterday.

The Hyundai-led consortium beat Samsung Electronics to buy the plot in the capital’s Gangnam district.

Shares of Hyundai ended down 1.3% at 187,000 won each yesterday, their lowest level in 17 months. Kia Motors slipped 0.8%, and Hyundai Mobis was up 0.6%. The $10bn price-tag is equivalent to nearly two years wages for Hyundai’s 63,099 employees in Korea.