Hyundai directors kept in dark on size of $10b land bid

Hyundai Motor and two listed affiliates did not seek board clearance for the size of their record $10 billion bid for a plot of land in Seoul, more than triple its appraised value, four board members of the companies told Reuters.

Thursday's winning bid for the land sent shares in Hyundai Motor, Kia Motors and Hyundai Mobis plunging, wiping out $8 billion in shareholder value, and sparked howls of protest from investors, rekindling worries about corporate governance at South Korea's conglomerates, or chaebol.

While boards of the three firms discussed and approved bidding for the plot in the capital's high-end Gangnam district to house a headquarters complex, hotel and automotive theme park, the bid price was not shared with directors as it was deemed to be confidential, three of the directors said.

The Hyundai Motor and Kia Motors boards unanimously approved making a bid for the KEPCO land, two directors said.

"The price was top secret, so it was not something we discussed at the meeting," said one, declining to be identified given the sensitivity of the matter. "The intangible benefits go beyond the appraisal price of the land."

Another director at one of the companies said its board heard and discussed information about the appraisal price of the KEPCO land and the value of nearby buildings. "Hyundai has many grand ideas around the KEPCO land," he said. "I think it's worth it."

Hyundai Motor Group, headed by 76-year-old Chung Mong-koo, declined to comment on board level decision-making behind its bid, and also said it had not yet decided how the purchase price would be divided among the three companies.

"The one very core element was missing, then, during the process," said Park Yoo-kyung, a Hong Kong-based director specializing in corporate governance at Netherlands-based APG Asset Management, which manages $482 billion in pension assets and holds shares in the three Hyundai firms in the bid group.