Hyundai Plans to Break Up Conglomerate Into 5 Firms

Hyundai Group, South Korea’s largest family-owned conglomerate, could split into five smaller independent entities by 2003 and slash group debts by a staggering $28.3 billion to $38 billion by year’s end.

The highly leveraged and diversified conglomerates--called chaebol--have tentacles extending into every corner of the economy. They have been taking the lion’s share of the blame for an economic crisis that began in 1997.

Hyundai, whose total assets of $74 billion are larger than Malaysia’s 1998 gross domestic product of $73.35 billion, said it would transform itself into companies focusing on electronics, cars, heavy industry, construction and finance.

“In reality, Hyundai Group would completely be dismantled,” Park Se-yong, chairman of Hyundai’s corporate restructuring committee, said at a news conference.

Hyundai would spin off its auto division by 2000 and the other four divisions by 2003.

“The smaller groups will be run independently with only core companies staying, and the rest [of the group’s subsidiaries] being eliminated,” he said.

Hyundai said it would also reduce the number of its affiliates to 26 from the current 79 by the end of this year through mergers, sales, spinoffs and closures, Park said.

Some analysts expressed doubts about Hyundai’s plans.

“It’s so unspecific and there’s so much time before it’s actually supposed to happen that there could be many mitigating circumstances between now and then,” said Warburg Dillon Read Research Director Richard Samuelson.