Elliott Management pushes for Hyundai shareholder support

Elliott Management

Elliott Management on Wednesday prompted shareholders of a Hyundai Motor to vote for its proposal for higher dividends and new board members, one day after the South Korean conglomerate declined demands by the U.S. activist investor.

A rising dispute between the two has complicated attempts to renovate South Korea’s No.2 conglomerate and pave the way for the company’s executive vice-chairman, Euisun Chung, to take over as group chairman from his father Mong-Koo Chung.

Hyundai Motor and Hyundai Mobis, under pressure to address excess cash and governance structures, declined Elliott’s demands for a combined 7 trillion won ($6.3 billion) dividend payout, much above the companies’ proposed payouts of almost 1 trillion won.

The companies also declined Elliot’s call for new board and audit members. Investors of Hyundai Motor and Hyundai Mobis are going to decide which proposals to support at their general shareholders meetings on March 22.

Elliott, in an open letter issued on Wednesday, prompted Hyundai Mobis shareholders to vote for its proposals.

“We are … asking today for all shareholders to support these landmark resolutions, which are designed to both transform governance and right-size the company’s overcapitalized balance sheet,” Elliott’s letter to Hyundai Mobis shareholders states.

“We expect a vote showdown at the upcoming meeting, which will create a favorable environment for minority shareholders,” stated Chung Yong-jin, an analyst with Shinhan Investment and Securities.

Elliott had proposed a 2018 dividend of 4.5 trillion won for the automaker Hyundai Motor and 2.5 trillion won for auto parts supplier Hyundai Mobis, but the companies declined the proposals, saying the plans would weaken their future competitiveness.

Hyundai Motor stated on Wednesday it prepares to increase the core automotive businesses’ operating profit margin to 7 percent by 2022 from 2.1 percent in this year, and declared 45.3 trillion won investment plan over the next five years.

Opposition from Elliott led Hyundai to drop an attempt to overhaul its ownership structure in 2018. Euisun Chung pledged in January to complete a restructuring expected to pave the way for him to take the reins of the group.

The group is likely to come up with a modified restructuring plan that is expected to be put to a vote at an extraordinary shareholders’ meeting in April or May, experts have stated.

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