Boards Approve Hyundai’s $10 Billion Land Purchase

Plans to spend 10.6 trillion won ($10 billion) for land on which to create a giant headquarters and tourist attraction in Seoul have been approved by the boards of Hyundai, Kia and Hyundai Mobis.

The votes come as alarmed shareholders triggered a drop in the market value of the three companies by 11.6 trillion won ($11 billion).

Bloomberg News cites one market analyst firm that says the sale is the world's biggest single-asset real estate deal ever.

The price of the land purchase in Seoul's exclusive Gangnam district will be borne 55% by Hyundai, 25% by Hyundai Mobis and 20% by Kia. All three companies would eventually locate their headquarters on the site. The trio is part of the Hyundai Group chaired by billionaire Chung Mong-koo, whose grand vision for the property is driving the deal.

Hyundai and the two affiliates say their board approved the deal after examining how the bid was derived, calculating future value projections and determining the ability of each partner to pay. Critics, who note that Hyundai's bid was three times the appraised value for the 20-acre site, claim the board illustrates weakness in Hyundai's governance structure.