Hyundai Heavy Looks to Take Over CJ Financial Units

By Park Hyong-ki

Staff Reporter

Although the takeover deal of CJ Investment & Securities and CJ Asset Management has yet to be finalized, Hyundai Heavy Industries (HHI) seems to be the winner as it reportedly offered the highest bid.

Hyundai Heavy, the country's largest shipbuilder, and ING, a global financial services group, have been fighting to take over the two financial units of CJ Group, a conglomerate with interests in food and entertainment.

As the group transformed itself into a holding company, it is required to liquidate non-core subsidiaries. Under antitrust regulations, holding companies with their main interest in manufacturing cannot operate financial units, a move aimed at preventing chaebol from expanding into non-core markets.

Analysts expect HHI to win the deal as it will strike a favorable bargain with CJ.

``Even though ING can see a greater synergy effect from the takeover, there are market rumors that Hyundai Heavy is mounting stronger pressure than the financial group,'' said Sung Ki-jong, an analyst at Daewoo Securities.

The analyst forecast sales of both CJ Investment and CJ Asset Management to be around 800 trillion won, including premiums. The market value of CJ Investment is estimated to be around 200 billion won, and that of CJ Asset Management about 36 billion won.

The labor union of CJ Investment said it has finished discussing with Hyundai Heavy regarding job security and welfare. ``CJ Group is moving to include job security in the deal if it makes a contract with Hyundai Heavy as the preferred bidder,'' a union official said.

Analysts say HHI may inject capital from its affiliate Hyundai Mipo Dockyard's reserves when acquiring the financial subsidiaries.

Hyundai Heavy has been emerging as one of the potential bidders whenever the news of mergers and acquisitions has surfaced on the market regarding Hyundai Engineering & Construction and Hynix Semiconductor.

Market watchers say Hyundai Heavy is aiming to acquire financial companies as it can utilize them for further mergers and acquisitions, and capital management.

CJ is expected to officially announce its preferred bidder by the end of the week.

phk@koreatimes.co.kr