Land deal hits Hyundai shares

Hyundai Motor Group will pay Korea Electric Power (KEPCO) a record $10 billion (7.76 billion euros) for the site of its new headquarters in Seoul's high-end Gangnam district, after out-bidding Samsung Electronics, the auto company said Thursday.

Hyundai said it plans to build a vast complex on the 79,342 square meter site that will house its headquarters as well as a hotel, convention center and a theme park. It noted that German rivals BMW and Volkswagen have also built auto themed tourist attractions around their headquarters.

Investors and analysts were up in arms at the $10 billion price though, knocking as much as 10 percent of Hyundai Group companies' stocks. Hyundai Motors lost 9 percent.

Investors say the company should be pouring money into higher dividends, new factories and research and development.

But while some were shocked, the move could come in handy with regards to the tax man; new regulations are being mooted which would tax excess corporate cash.

Based on last year's earnings, Hyundai Group companies would be highly exposed to the new rules. They would require conglomerates to spend at least 60 percent of net profit on investment, wages and dividends.

bew/cjc (Reuters, AP)