On Wednesday, Kia Motors Corp. announced that by 2016, it will build a car assembly plant in Mexico. The plant will help Kia Motors make a foothold in Mexico’s local production market and that in turn help the company to converge worldwide demand for new cars.
Kia Motors is one of the leading automobile companies in South Korea. More than 30% of Kia Motors’s stocks are owned by Hyundai Motor Company. The company has total assets worth of $35.6 billion and in 2013, posted a net income of $3.8 billion. The plant will cost $1 billion and it will be built in the vicinity of the city of Monterrey.
The company said an investment agreement between Kia Motors and Mexico Government has already been signed. The site Monterrey is located in Northeast Mexico and Kia Motors will produce “a range of yet-to-be-confirmed compact models at the new plant.” The construction of the plant will not be delayed; Kia Motors wants the construction to start in September 2014 so the work could end by the first half of 2016.
The annual production capacity of the plant will be 300000 compact cars. The global manufacturing capacity of Kia Motors is 3.37 million cars. Of this, 1.69 million cars are manufactured in South Korea’s domestic units. Rest 1.68 million vehicles are produced across its overseas manufacturing units, which means when the plant will be operational, it will contribute to almost 17% of the company’s total global production.
The upcoming automobile plant will occupy almost 500 hectares of land. The site is also the home of many other commercial units, many of which are facilities of supper companies. The reason Mexico has been chosen to set up a new plant is that it is one of the countries where Kia Motors doesn’t have a presence. Also, there are highly skilled and low-cost labours in Mexico and Mexico is the fourth-largest auto exporter in the world.
Since Mexico is near to the US, Kia Motors can meet the demand of new compact vehicles in the US market. The vice chairman of Kia Motors, Hyoung-Keun Lee said in this regard “We are committed to producing world-class quality vehicles here in Mexico that feature industry-leading styling and high-tech convenience.”
eBay may sell off PayPal. Nothing is confirmed at this moment but there is a strong speculation and eBay shares have gone up 7% after a report that eBay told some PayPal job candidates the company might be spun off. There are also rumours that billionaire Carl Icahn will supervise the separation and gain profit.
The report says the payment arm could be separated from the owning company by early next year. The chief executive of eBay is John Donahue. He is currently the acting CEO of both PayPal and eBay. He has been the acting CEO of eBay and PayPal since the former CEO Dave Marcus joined Facebook.
PayPal was acquired by eBay in 2002 for a whopping sum of $1.5 billion. It is the trendsetter in payment gateway business and the fastest growing unit of eBay. Analysts are expecting PayPal to soon account for half of eBay’s revenue.
Carl Icahn, the billionaire investor has long been running a campaign for the spin-off of PayPal. He has reportedly invested $1 billion in eBay stocks. Interestingly some business tycoons are backing Icahn. One of them is Elon Musk, the co-founder of PayPal.
eBay responded by saying the existing board of directors “has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value.” It was heard later on that eBay and Icahn reached to a settlement and the latter dropped the suggestion of splitting off PayPal.
Over last one year, PayPal has been showing activities like acquiring a company called Braintree for $800 million and introduced a product called Venmo Touch after the acquisition of Venmo by Braintree. The product is a one-touch consumer-facing payment solution.
The acquisition and new product launch gave a boost to eBay revenue. The company garnered 16.05 billion revenue in 2013. More than $6 billion of the revenue came from PayPal. After the rumour broke, eBay stocks hit an intraday high of $56.98. eBay stocks finally closed at $55.89, 4.6% up from previous day’s closing.
eBay, however, downplayed the impact of the report. In a statement, the company said, “As we discussed during proxy season and in our Q2 financial results call, the board will continue to assess all alternatives to create that long-term value.”
The Los Angeles based Evoq Properties Inc. has announced it will be sold to an investment group for a whopping $357.4 million. The investment entity is led by affiliates of Atlas Capital Investors. Some other investors in the group are USAA Real Estate Company and Square Mile Capital Management.
The portfolio of Evoq Properties includes a number of buildings in downtown Los Angeles. One of them is the colossal office campus Alameda Square. Back in February, the company gave the indication of a possible acquisition. CEO Martin Caverly said back then, “There’s a tremendous amount of interest in Downtown L.A. in particular from institutional investors.”
The stakeholders of Evoq Properties will receive $12.96 for each share in the sale. The sale is expected to be completed by October this year. The board of directors of the company have already given go-ahead to the transaction. The chief gainer will be Mmpi Acquisition, a venture funding company, set up by Mount Kellett Capital Management and Global Asset Capital in 2011. It is currently the largest shareholder in Evoq.
The history of Evoq Properties is quite fascinating. The company was created by Richard Meruelo and John Maddux. It was originally called Meruelo Maddux Properties Inc. It became a public limited firm in 2007 and two years later filed for protection from Chapter 11 Bankruptcy.
After the new managers stepped in, they expelled Meruelo and Maddux and changed the company’s name to Evoq Properties. To improve the company financial standing as well as reputation, the new managers sold off non-essential assets and developed the 32-acre Alameda Square. Evoq also owns additional 13-acres of properties in LA.
The investors Atlas Capital and Square Mile in the past have shown interest in properties that need repositioning and overall improvement. In downtown LA, their such properties are plenty in number and many of them were built by Evoq. CEO Martin Caverly said, “The acquiring investors recognized the tremendous value of Evoq’s portfolio and the opportunity to make a significant investment in downtown Los Angeles.”
According to Caverly, the company was redesigning the entire LA downtown with more than $36 million in cash. After the sale also rebuilding LA downtown will continue. “We are confident that the new ownership group will play a positive role in downtown Los Angeles’ continuing renaissance.” He said.