Around $8 billion in shareholder value were sent to oblivion at Hyundai Motor Co. and two affiliates, after the companies failed to seek board clearance for a $10-billion bid for a plot of land in Seoul’s high-end Gangnam district. Aside from falling shares at Hyundai Motor, Kia Motors and Hyundai Mobis, investors expressed disgust in the move as the bid was around three times the land’s appraised value.
According to an official with Korea Electric Power, owner of the land, Hyundai Motor Group won the sealed auction by "a wide margin." Fellow bidder Samsung Electronics reportedly placed a bid between $4 billion and $5 billion.
While boards of the three companies discussed and approved bidding for the KEPCO land, the bid price was not shared with directors since it was considered as confidential, three of the directors disclosed.
The Hyundai Motor and Kia Motors boards unanimously green-lighted a bid for the land. One of the directors said that the intangible benefits from acquiring the land “go beyond the appraisal price.”
Another director at one of the firms said its board heard and discussed information about the land’s appraisal price as well as the value of nearby buildings. The companies were planning to buy the land to house a headquarters complex, hotel and automotive theme park. “Hyundai has many grand ideas around the KEPCO land," the director remarked to Automotive News.