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Elliott Management

Elliott, Hyundai Motor to cancel $890 million in treasury shares

Hyundai Motor stated on Friday it will cancel $890 million worth of treasury shares, its first stock cancellation in 14 years – a strategy that comes amid shareholder pressure to enhance returns, restructure and bounce back from dismal revenues.

The cancellation is an initial victory for U.S. hedge fund Elliott Management, the most well-known among the few activist shareholders to look forward to reforms. But whether Hyundai will cede to its other demands is not that certain.

“While this is a positive development, it falls well short of what shareholders require,” Elliott spokesman Michael O’Looney stated.

Hyundai’s move shows the chaebol is now more responsive to calls for reform. They also deal with government pressure to enhance governance and public anger over the perception that their development has not sufficiently benefited smaller firms and common people.

Elliott increased pressure on the South Korean automaker on Monday, asking for a holding company structure, the addition of three independent board members along with a share cancellation.

“Hyundai Motor seems to be trying to reach a compromise with Elliott by accepting part of its demands,” stated Kim Jin-woo, an expert at Korea Investment & Securities.

Prior the shareholder vote on a reorganization plan for the wider group in May, Hyundai stated it is looking to cancel 560 billion won of present treasury shares on July 27, and will buy back and eliminate another 400 billion won worth of stock.

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