General Electric to acquire shares in Hyundai card unit

Aut 2 | Updated: Aug 3 2005, 05:30am hrs
General Electric Co, the worlds second-biggest company by market value, agreed to buy shares in Hyundai Motor Cos credit-card unit to expand its consumer finance business in South Korea, Asias third-largest economy.

GE, based in Fairfield, Connecticut, will buy 204 billion won ($199 million) of shares in Hyundai Card Co from South Koreas largest automaker, according to regulatory filings. GE will also buy shares from Hyundai Motors affiliates and new equity issued by the credit-card company, bringing its stake to 43%, Edaily reported.

The investment expands GEs alliance with Hyundai, South Koreas second-largest industrial group, after investing in 2004 in its auto-financing unit.

Hyundai joins Samsung and LG Groups in recapitalising their card businesses after a credit-card bubble burst, triggering trillions of won of losses.

GE will buy the shares from Hyundai Motor in September, the filing showed. The automaker will reinvest 143 billion won of the proceeds buying new shares issued by the card company the following month.

Hyundai Motor affiliates Kia Motors Corp and INI Steel Co will also sell shares in the card company to GE, making the US company the single-largest shareholder, Edaily said. Hyundai Card posted combined net losses of 991 billion won in the three years ended in 2004.

Goldman Sachs Group Inc is advising Hyundai Motor and Hyundai Card.