Details were sketchy on some of the deals but two big mergers were announced by the Federation of Korean Industries (FKI), a lobby group for major conglomerates. Hyundai group's unit Hyundai Electronics Industries Co will merge its semiconductor division with LG Semicon Co, the FKI said in a statement.

Details of the stakes in the merger would be further discussed, it said. Hyundai Oil would take over the operations of Hanwha Energy's oil refinery, petrochemical plants and retail business, the FKI said.

The merger creates the third largest oil company in South Korea with an asset base of about $6.0 billion and gives Hyundai greateer access to the lucrative Seoul market, analysts said.

Hanwha Energy, the country's smallest refiner with a 275,000 barrel-per-day (bpd) refining capacity and an eight per cent share of the domestic retail market, has been up for sale since December.

Hyundai owns a 310,000-bpd refinery and has a 10-per cent share of the retail market.

South Korea's five oil companies have a combined refining capacity of about 2.5 million barrel bpd.

The FKI said Hyundai, Daewoo and Samsung would discuss restructuring in the auto industry if South Korea fails to sell financially troubled Kia Motors Corp's through an international tender.

All three bid on the company in the first tender, which failed this week after bidders demanded the government write off some of Kia's debt. Unlisted Samsung General Chemicals Co and unlisted Hyundai Petrochemical Co will merge their businesses in Daesan city and try to attract foreign investments, the statement said.

The FKI said Samsung, Daewoo and Hyundai will merge their aircraft units and launch a new company and try to bring in foreign investments to boost international competitiveness.

Likewise, Hyundai, Daewoo and Hanjin will merge their railcar units and launch a new company and also try to bring in foreign investments.

Hyundai Heavy Industries Co Ltd and unlisted Korea Heavy Industries & Construction will merge their power generation facilities, but details on that would have to be discussed further, the FKI said.

Samsung Heavy Industries Co Ltd would transfer its ship engine and boiler units to Korea Heavy Industries, the FKI said. The statement provided no further details on these deals.

"Using this plan as a model, we hope to pursue restructuring further," Son Byung-doo, executive deputy chairman of the FKI told a news conference attended by most of the conglomerates' chairmen and executives.

He said the various deals would lop off 20 trillion won in overlapping investments over the next five years. Export prices would rise by 10 per cent a year because of reduced competition among the groups, Son said.

They would save another 10 per cent a year in reduced production costs, he said.

The blueprint would also attract up to $10 billion in foreign capital investment by 1999, while maintaining employment at current levels or even creating new jobs, Son said. The government has been pushing South Korea's top five business groups for months for these big deals to reduce competition in sectors suffering from overcapacity.