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Hyundai scraps restructuring deal amid pressure from US hedge fund

South Korean auto giant Hyundai Motor Group's Hyundai Mobis Co. Ltd dropped its spinoff merger plan with Hyundai Glovis Co. Ltd. amid pressure from U.S. hedge fund Elliott Management Corp. for a better restructuring plan.

The group said new a restructuring plan will be presented in due course. The prior plan was to spin off Mobis' module manufacturing and after-sales parts businesses and merge them into Glovis.

Since the announcement of the restructuring plan in March, "we have heard much constructive criticism and feedback from a number of shareholders, investors and other market participants," Mobis CEO said in a letter to shareholders. "This has led us to understand that our communications with our shareholders and the market regarding the need for the restructuring were insufficient."

Accordingly, Hyundai Mobis and Hyundai Glovis shareholders meetings scheduled for May 29 were canceled.

Elliott Management Corp., which owns $1 billion of shares in Hyundai Motor entities, had argued the proposal needed improvements as it was not backed by sound business rationale and lacked clear benefits to minority shareholders. The fund challenged the deal by unveiling its own restructuring plan for the carmaker, which it said provides a stable and transparent shareholding structure and strengthens the core automotive business.