Hyundai Steel plans to take over the cold-roll steel making business of its affiliate Hyundai Hysco in a share deal that values the operation at 2.8 trillion won ($2.6 billion).
The agreement between two members of Hyundai Motor Group, the nation’s second-largest business conglomerate, will help it compete with Posco, South Korea’s biggest steelmaker, amid an industry slump. Steelmakers globally have been struggling with falling profits as Europe’s debt crisis and China’s slowdown cut demand and prices.
“Hyundai Steel will become a complete steelmaker, able to rival the country’s biggest steelmaker Posco,” said Lee Won Jae, an analyst at SK Securities Co. in Seoul. “This is definitely a positive factor considering that there are no steelmakers around the world that has a parent company like Hyundai Motor Group, which has ongoing demand for steel products.”
Hyundai Steel and Hysco are key components in Hyundai Motor’s supply chain, which spans raw-material steel to end-product cars. Hyundai Steel sells hot-rolled coil steel to Hysco, which is then used as a raw material to make car sheets that are sold to Hyundai Motor, the world’s fifth-largest carmaker.
Hyundai Group Chairman Chung Mong Koo, 75, is the biggest individual stakeholder of both Hyundai Steel and Hysco and controls the group’s 57 affiliates through a web of cross-shareholdings. His son Chung Eui Sun is co-vice chairman at Hyundai Steel, while Hysco Chief Executive Officer Shin Sung Jae is Chung’s third son-in-law.
) - Thursday, October 17th, 2013 - filed under Hyundai
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