Hyundai Heavy Industries Holdings Co., the holding company of South Korea's largest shipbuilding conglomerate, said Monday it has signed a US$1.2 billion deal to sell a stake in its oil-refining unit to Saudi Aramco as it is set to take over a smaller local rival.
In a regulatory filing, Hyundai Heavy Industries Holdings said it has signed the contract to sell 41.66 million shares -- a 17 percent stake -- in Hyundai Oilbank Co. to the world's largest crude exporter to improve its financial structure.
Under the deal, the Saudi oil firm holds an option to acquire a further 2.9 percent stake in Hyundai Oilbank.
Originally, the two signed a deal in January, under which Hyundai Heavy agreed to sell a 19.9 percent stake in Hyundai Oilbank, the country's smallest oil refiner, for up to 1.8 trillion won to Saudi Aramco.
The deal is expected to help finance Hyundai Heavy's acquisition of Daewoo Shipbuilding and Marine Engineering Co.
In March, Hyundai Heavy signed a formal deal, worth an estimated 2 trillion won, with the state-run Korea Development Bank to buy the smaller local shipbuilder. The bank is the largest shareholder of Daewoo Shipbuilding, with a controlling 55.7 percent stake in the company.
The latest deal makes Saudi Aramco the second-largest shareholder of Hyundai Oilbank with its 17 percent holding, followed by Hyundai Motor Co. with 4.3 percent. Hyundai Heavy Industries Holdings retains a 74.1 percent stake in Hyundai Oilbank.
Saudi Aramco is currently the largest shareholder of S-Oil Corp., also a major oil refiner in South Korea. (Yonhap)