Hyundai Elevator share gains to three-year high in Seoul trading
NEW YORK: Hyundai Elevator Co., South Korea's largest elevator maker, rose to the highest level in more than three years in Seoul trading after share purchases by Schindler Holding AG and parent Hyundai Group stoked takeover speculation.
The Hyundai Group unit climbed by the daily 15 percent limit to 127,500 won at the 3 p.m. trading close, the highest price since November 2007. Affiliate Hyundai Merchant Marine Co. gained 2.2 percent, the most since Dec. 16, to 37,150 won.
Hyundai Elevator rose by the limit for a second day after Schindler, the world's largest maker of escalators, said Dec. 24 it had raised its stake to 35 percent. Hyundai Group's Hyundai Logiem Co. also boosted its stake last week, to 27 percent. "The share purchases by Schindler and Hyundai Logiem have spurred speculation that Hyundai Elevator may be a target," said Ryu Jae Hyun, a Hong Kong-based analyst at Mirae Asset Securities Co.
Schindler bought 1.9 percent of Hyundai Elevator on the market for 12.9 billion won, according to a Dec. 24 statement from unit Schindler Deutschland GmbH.
"We increased our investment to protect our interests," Barbara Schmidhauser, a spokeswoman for Hergiswil, Switzerland-based Schindler, said by phone today. "At this time, I can't say whether Schindler has any plans to buy more shares or increase its investment." Hyundai Logiem announced its stake increase in a regulatory filing on Dec. 21.
Hyundai Group, including Hyundai Logiem and the family of Chairwoman Hyun Jeong Eun, owns 51 percent of Hyundai Elevator, which is enough to maintain control, said Lee Mae Hee, a Hyundai Elevator spokeswoman.
Hyundai Elevator said on Dec. 10 that it intends to sell 3.6 million new shares next month. The sale was part of Hyundai Group's fundraising plans as it sought to buy a controlling stake in Hyundai Engineering & Construction Co. The group was stripped of its preferred bidder status last week after failing to allay concerns about its ability to pay for the stake.
Hyundai Merchant also last week raised 326.4 billion won selling 10.2 million new shares at 32,000 won each in a rights offering. Hyundai Elevator, the shipping line's biggest shareholder, bought 1.8 million shares.
Daishin Securities Co. and NH Investment & Securities Co. agreed to purchase new shares that were originally offered to existing Hyundai Merchant shareholders including Hyundai Heavy Industries Co. and KCC Corp. These shareholders turned down the opportunity to buy the stock in the rights offering.
The purchases by Daishin and NH Investment will ease the financial burden on Hyundai Group as it will no longer need to buy the stock itself, Mirae's Ryu said.
In a separate news , it is reported that More U.S. companies had their credit ratings boosted by Standard & Poor's this year than saw them cut for the first time since 1997 as borrowers increased profits and stockpiled cash.
Ford Motor Co., the world's most profitable automaker, and San Jose, California-based EBay Inc. were upgraded by S&P along with 756 others, compared with 722 downgrades, according to data compiled by Bloomberg. In 2009, S&P slashed corporate debt grades more than three times as often as it raised them, the data show. Companies held $1.17 trillion of cash, the most on record compared with the value of their assets, as the U.S. recovered from the worst recession in more than 70 years. Rising confidence in the ability of borrowers to meet debt payments led investors to push relative yields down to the lowest since 2007. "Corporate fundamentals are about as strong as we've ever seen them," said Edward Marrinan, a credit strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut. The creditworthiness of borrowers will continue to rise even as they are tempted to accelerate mergers and acquisitions and repurchase stock, according to Marrinan. -Bloomberg