The CEO and president of South Korea's Hyundai Motor Co., Lee Won-hee, urged shareholders to give their support to parent conglomerate Hyundai Motor Group's restructuring plan, deeming it the most "transparent and optimal option" to improve its competitiveness and increase shareholder value, Yonhap News Agency reported May 17, citing a company statement.
Lee's statement was in response to U.S. hedge fund Elliott Management Corp. proposing its own strategy since it believed that Hyundai's plan was not backed by sound business rationale and lacked benefits to minority shareholders, according to the report. Elliott has disclosed that it owned $1 billion worth of shares in the conglomerate, including Hyundai Mobis Co. Ltd, Hyundai Motor and Kia Motors Corp., according to a Reuters report in early April.
The hedge fund's "Accelerate Hyundai" proposal outlined a company structure it believes provides a stable and transparent structure for shareholders and improves the core automotive business.
According to the Yonhap report, Elliott and other proxy advisers demanded that the company do more to enhance shareholder value with an increase in dividends.
The Hyundai group's plan is to merge Hyundai Mobis's module manufacturing and after-sales parts segments with its logistics division Hyundai Glovis Co. Ltd. to streamline the governance structure, according to a separate Yonhap report in March. Hyundai Motor would also acquire all shares of Hyundai Mobis-owned Kia Motors, Hyundai Glovis and Hyundai Steel Co., as part of the plan.
Elliot and certain proxy advisers reportedly argued against the proposed share swap, charging it would only benefit Hyundai Glovis shareholders while leaving Hyundai Mobis shareholders with no benefits, according to the report.
A foreign investor told Yonhap that the swap ratio is unfair and that Mobis' growth potential is bigger than that of Glovis.
On May 15, Hyundai Mobis CEO Lim Young-deuk called for shareholders to support the plan, the report said.
Yonhap also reported that South Korea's Truston Asset Management Co. has come out in support of Hyundai's plan.