Hyundai is paying a record $10 billion for a 19.6 acre plot of land
Hyundai Motors is reportedly paying somewhere around $10 billion for a 19.6 acre plot of land in Gangnam, a trendy district of Seoul. This massive transaction represents the highest amount that has ever been paid for a plot of land in South Korea, and was so expensive that it scared the automaker’s investors enough for stock prices to plummet.
Apparently many of the shareholders were upset because the massive amount of money that was spent on a single plot of land could have been put back into the company for research, development, or various other improvements. Instead, the South Korean automaker reportedly paid three times as much as the land’s appraisal value.
The announcement of the transaction caused Hyundai’s stock price to drop down by a whopping 9%, and there were also losses from Kia and the company’s parts arm. At the end of the day, the three of them lost nearly $8 billion in value from the falling share prices, which wouldn’t even be enough for them to buy the plot of land.
“In order to achieve production capacity of 10 million cars and bolster brand value that befits a global top-five company, we need a global business center. The bid is the result of comprehensively reviewing its value as a symbol of the group’s second growth phase,” a Hyundai spokesperson told Reuters. The company and electronics giant Samsung were both bidding to buy the land from Korea Electric Power, but clearly the automaker was willing to pay anything to get it.
Read more about the story at Reuters.
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