South Korea’s antitrust chief on Thursday stated U.S. activist fund Elliott Management’s proposal for Hyundai Motor Group to embrace a holding company structure was “inappropriate” and, if applied, would be in infraction of antitrust law.
The proposal consists of Hyundai’s financial subsidiaries that comes under the ownership of a non-financial entity, which is restricted by law, Yoon Soo-hyun, a spokesman at the Korea Fair Trade Commission, stated in confirmation of the commissioner’s statements made at an event in Seoul.
“Elliott’s demand is inappropriate and if it (Hyundai) accepts the demand it can breach the fair trade act,” sated Kim Sang-jo, the commissioner.
Elliott refused to comment.
Elliott, during last week, had said the restructuring plan of South Korea’s second-largest conglomerate was not sufficient. Instead, it called on the autos-to-steel group to reveal a holding company structure, increase shareholder returns and hire more independent board members.
Elliott proposed Hyundai Mobis be integrated with Hyundai to form an holding company which would also include financial subsidies including Hyundai Capital and Hyundai Card.
In presentation material that contains the fund’s proposal, Elliott highlighted that Hyundai would have up to a two-year grace period to resolve the concerns about a holding company’s ownership of financial subsidiaries under the fair trade act.
Kim Woo-chan, a finance professor at Korea University Business School, stated Hyundai would not really accept the proposal on the holding company as it does not involve Hyundai Glovis, whose biggest shareholder is Hyundai’s vice chairman and heir apparent, Chung Eui-sun.
“Elliott’s proposal is not realistic,” said Kim Woo-chan.
