S. Korean Securities Firm Accepts AIG Bid

Hyundai Securities Co. capitulated on price and accepted the terms of a $310-million takeover offer from American International Group Inc. and other foreign investors, paving the way for the biggest overseas investment in South Korea’s financial industry.

The board of Hyundai Securities broke a two-week impasse and ended 15 months of talks by agreeing to accept 7,000 won, or $5.44, per preferred share to sell a 35% controlling stake in Korea’s second-largest brokerage, said Wilbur Ross, one of the U.S. investors.

“There is nothing left on the negotiating table,” said Ross, a corporate turnaround specialist who heads W.L Ross & Co. in New York.

AIG Chairman Maurice “Hank” Greenberg said on Aug. 30 that his group was willing to walk away from the talks if Hyundai and the government didn’t lower their asking price.

The AIG group includes California Public Employees Retirement System, the largest U.S. public pension fund, and GE Capital Corp., the top nonbank finance company.

The AIG-led investment is part of a broader, $1.56-billion government-orchestrated bailout of Hyundai Investment Trust & Securities Co. and Hyundai Investment Management Co., in which Hyundai Securities holds stakes.

The government agreed to invest about $699 million in the two financially troubled units if AIG bought one-third of Hyundai Securities, 55% of Hyundai Investment Trust and 29% of Hyundai Investment Trust Management.

For AIG, the purchase provides access to one of Korea’s largest distribution networks for retail sales of mutual funds and other financial products.

The $5.44 share price for Hyundai Securities is about 20% less than the board originally demanded and 15% below Friday’s close.

The sale should be completed by the end of October, Ross said.

Minority shareholders, who own about 80% of Hyundai Securities, objected to AIG’s bid because it will pull the share price lower.

Professor Jang Hasung of Korea University, who heads up a group that looks after the interests of minority shareholders, said he’s “especially disappointed” by the participation of CalPERS, which is regarded as a champion of minority shareholder rights.