U.S. activist fund Elliott Management has stated it will vote against Hyundai Motor Group’s restructuring plan and prompted other shareholders to decline the proposal to reform South Korea’s second-largest conglomerate.
A Hyundai Motor Group executive replied that the proposed arrangements to simplify the carmaker’s complex ownership structure would not modify and promised higher returns for shareholders.
“Elliott is among many people who express their opinions,” stated Cheong Jin-haeng, president of Hyundai Motor Group, informed reporters on the sidelines of an industry event.
Measures to increase investor returns would be laid out following a meeting on May 29 where shareholders are going to vote on the restructuring, he included.
Elliott stated last week that the restructuring plan was “based on flawed assumptions” and the conglomerate’s “token measures” to buy back and cancel shares were not enough to gain fair value for investors.
“More significant measures are needed to address the long-unresolved concerns at the group that have led to significant valuation discounts and under-performance at Hyundai Mobis, Hyundai Motor and Kia,” Elliott stated.
Under the plan, auto-parts maker Hyundai Mobis is going to spin off its domestic module and after-service parts businesses and merge them with Hyundai Glovis, a logistics firm.
Elliott states it holds more than 1.5 percent of common shares in Hyundai Mobis. Hyundai Motor Group Chairman Chung Mong-koo and the group’s affiliates control a total 30 percent stake in Mobis, which will put the spin-off plan to a shareholder vote. The state-run National Pension Service holds almost 10 percent stake in Hyundai Mobis.