Kia Motors set on fighting Hyundai group takeover bid

"We are confident that Hyundai’s takeover of Kia is the only choice of the local auto industry to survive," said Lee Young-il, vice president of Hyundai Group. "Hyundai’s takeover of Kia will stabilisefinancial markets and will greatly contribute to the nation’s ability to overcome the economic crisis," he said.

Kia’s woes were pivotal in sending the world’s 11th largest economy into a tailspin, forcing South Korea in December to accept a record $ 58.35 billion IMF-arranged bailout.

"There will be a lot of obstacles to acquire Kia. But one way or another, Hyundai will succeed in getting Samsung out of the race," said Jay Park at LG Securities. Samsung Motors declined to comment. "Even though we are a little surprised about Hyundai’s plans to take over Kia Motors as the group has said it had no intention to do that, we have no comment on another company’s plan," said Samsung Motors spokesman Han Jae-yoon.

Samsung, which began selling cars in March, has been rumoured to be planning to take over Kia Motors in co-operation with Ford Co of the United States. Han, however, denied it.

Analysts said Hyundai would gain little by acquiring Kia except blocking Samsung. "Hyundai can nip the potential threatfrom Samsung in the bud, but will gain nothing else," Ssangyong’s Sohn said.

Samsung, best known for producing semiconductors, has an experienced sales network and sophisticated marketing know-how, which worries established car makers. "I’m questioning whether Hyundai really has such an intention to takeover Kia," said Rhee Namuh, research head at Samsung Securities’ international department. "Is it worth it to takeover Kia by assuming all its liabilities?" Kia group’s debts total about 9.5 trillion won. Analysts said Ford might try to keep Hyundai from acquiring Kia to prevent the birth of another car giant. Ford and Japanese subsidiary Mazda Motor Corp are the single largest shareholder in Kia with a combined stake of 17 percent.