October 14, 2008

Hyundai Heavy increases stake in POSCO

Reuters reported that Shares in POSCO and Hyundai Heavy Industries surged to records recently after a unit of the shipbuilder bought another stake in the steel maker, highlighting greater ties between two firms facing stellar earnings.

Hyundai Heavy Industries unit Hyundai Samho Heavy Industries said that it had bought 436,000 shares in POSCO for a total of JPY 245.9 billion (USD 264.3 million) increasing its stake in the steel maker to 1.5%.

POSCO and Hyundai Heavy Industries had announced in April 2007 that they would do a swap deal in which they bought around 350 billion won worth of shares in each other.

Analysts said the increased shareholding could help anchor POSCO's management strategy while supporting its plans to adopt friendly shareholder measures such as share buybacks that would ultimately benefit the firms with which it swaps stakes. Hyundai Heavy Industries could also benefit as it depends on steel makers for the plates used to build vessels.