Elliot sells off stakes in Hyundai Motor firms, ending 20-mo proxy fight

2020.01.23 12:12:26 | 2020.01.23 15:46:50

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U.S activist investor Elliot Management that had waged a proxy fight against Hyundai Motor Group has sold off its entire stakes in Hyundai Motor companies last year, a move that is expected to accelerate the South Korean auto giant’s governance structure and business reform plan.

According to investment bank industry sources on Wednesday, Elliott Associates and its affiliate Potter Capital that reportedly owned a 2.9 percent stake in Hyundai Motor Co., 2.6 percent in Hyundai Mobis Co., and 2.1 percent in Kia Motors Corp. had disappeared from the shareholders’ list of the three companies as of Dec. 26, 2019.

Market experts suspect Elliott Associates and Potter Capital disposed all of their shares in the three Hyundai Motor Group companies sometime before the end of last year, with a loss estimated between 300 billion won ($257 million) and 500 billion won. The exact date when the U.S investor offloaded the stocks are unknown.

Elliot Management’s departure comes about 20 months after the U.S. activist fund, a critic of family-run chaebol entities, had launched a proxy fight against Korea’s household auto name.

In April 2018, it unveiled that its affiliates Elliott Associates and Potter Capital held a total $10 billion worth stakes in Hyundai Motor, Hyundai Mobis and Kia Motors. Since then, it has been vocal on management affairs in the companies, demanding Hyundai Motor Group to do more to improve governance structure and increase returns for stakeholders. Its move succeeded in blocking the auto conglomerate owner family’s plan to transfer power from group chairman Chung Mong-koo to his son and executive vice chairman Chung Euisun.

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But the activist fund lost in another proxy war later. Shareholders of the companies struck down Elliott’s nominations of outside board members by voting in favor of Hyundai Motor’s recommendations at the annual shareholders meeting in March. The activist fund also proposed dividend payments totaling 8.3 trillion won but it was voted down as well.

With Elliot exit from the proxy battle, Hyundai Motor Group’s plan to restructure its governance structure is expected to gain fresh momentum, industry observers said. The auto conglomerate has sought to turn auto parts making unit Hyundai Mobis into a de-facto holding unit over other affiliates including Hyundai Motor to simplify its complex cross-sharing structure, which would make father-to-son succession process easier.

Experts, however, anticipate the group would seek a different move as its plan for merging Hyundai Mobis and Hyundai Glovis was also met by strong opposition from the market.

On Thursday, shares of Hyundai Motor gained 2.76 percent to close the day at 130,500 won. Kia Motors rose 1.88 percent to 43,400 won, and Hyundai Mobis climbed 2.44 percent to 251,500 won.

By Lee Jong-hyuk, Park Yun-gu, and Cho Jeehyun

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