Hyundai Motor plans to disclose on Monday it is bidding for a controlling stake in Hyundai Engineering & Construction, an executive of the South Korean car maker said.

Hyundai Motor is now set to face off with Hyundai Group for control of South Korea's top builder and former flagship firm of Hyundai Group, which was split into automaking, shipbuilding and trading groups after the Asian financial crisis in the late 1990s.

We plan to announce our official position on the bid on September 27 and to submit the preliminary bid by the October 1 deadline, the executive told Reuters on Friday, asking not to be identified because the announcement had not yet been made.

Shareholders of Hyundai Engineering will receive preliminary bids for their $2.1 billion stake in the country's top builder by October 1, according to a notice in the Korea Economic Daily newspaper. Creditors will close the bidding for a 35 percent stake in the company by November 12.

Hyundai Engineering shares gained 3.2 percent by afternoon compared with the Korea Stock Exchange Index's .KS11 0.5 percent rise. Hyundai Motor shares were up 3.9 percent.

Hyundai Group, the department store, construction and tourism group, has said it is seeking to buy the Hyundai Engineering stake.

Shares of Hyundai Merchant Marine (011200.KS), the de-facto holding company of Hyundai Group, surged 15 percent on hopes that the acquisition of Hyundai Engineering would benefit Hyundai Group.

HYUNDAI MOTOR BETTER PLACED

Analysts said a local court's recent decision to accept Hyundai Group's request to nullify its creditors' moves to collect maturing loans will lend support to its effort to buy the stake.

Hyundai Motor, the world's fifth-biggest automaker, has hired Goldman Sachs to advise it on the bidding, a source told Reuters earlier this month.

If it participates in the bidding, Chung Mong-koo, Hyundai MOTOR's Chairman, will compete with his sister-in-law Hyun Jeong-eun, chairwoman of Hyundai Group.

Hyundai Motor is in better financial health than its rival Hyundai Group.

Hyundai Motor's debt-to-equity ratio is 55.1 percent as of June this year. Hyundai Merchant & Marine Corp's debt-to-equity ratio is 300 percent.

In terms of finance, Hyundai Motor Group is clearly ahead of Hyundai Group in the race, Suh Sung-moon, an analyst at Korea Investment & Securities, said.

BofA Merrill Lynch and a domestic consortium of Korea Development Bank and Woori Investment & Securities are advising the sellers, the notice in the Korea Economic Daily said.

(Reporting by Hyunjoo Jin and Ju-min Park; Editing by Brett Cole and Muralikumar Anantharaman)

South Korea