Hyundai declines Elliott’s payout call, shares increase ahead of showdown meeting

Hyundai Motor Group on Tuesday declined demands by U.S. activist investor Elliott Management for a 7 trillion won ($6.3 billion) dividend payout and new board members, complicating attempts to renovate South Korea’s second-biggest conglomerate.

Opposition from Elliott led Hyundai to ditch an attempt to overhaul its ownership structure in 2018, and Executive Vice-Chairman Euisun Chung pledged in January to finish a restructuring expected to make the way for him to succeed his father Mong-Koo Chung as group chairman.

Elliott, which was not available right away for comment, had proposed a 2018 dividend of 4.5 trillion won for Hyundai Motor and 2.5 trillion won for auto parts provider Hyundai Mobis, according to regulatory filings and sources.

This is well over the firms’ proposed payouts of almost 1 trillion won.

Hyundai Motor and Hyundai Mobis is going to hold separate annual shareholders’ meetings on March 22, when shareholders have a opportunity to vote on the respective proposals made by the firms and Elliott.

Hyundai Motor and Hyundai Mobis shares gained over 4 percent on Wednesday.

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

Hyundai Motor Group is expected to come up with a modified restructuring plan, which is anticipated to be put to a vote at an extraordinary shareholders’ meeting in April or May, experts stated.