Hyundai shareholders vote against Elliott proposal

Elliott Management

Hyundai Motor Group companies’ shareholders turned down Elliott Management’s demands on Friday for a massive special dividend and board seats, dealing a blow to the American hedge fund’s campaign to shake up South Korean conglomerate.

Although Hyundai fended off the threat from Elliott at the strictly watched vote, it still deals with a daunting challenge of winning shareholder support for a planned restructuring that should aid the handover of the company’s reins to heir apparent Euisun Chung.

Elliott thwarted Hyundai’s restructuring proposal in 2018, and Friday’s win would have provided fresh impetus to empower small investors in Asia’s fourth-largest economy, long dominated by powerful elites alleged of taking minority investors for granted.

However activist investor Paul Singer’s $34 billion fund failed to convince other shareholders on Friday that the group must pay out excess cash and bring in more independent directors to enhance governance and accountability.

Its demand for 7 trillion won ($6.2 billion) in dividend – over six times what Hyundai had offered – was declined by other minority shareholders on the grounds that the automaking group required to lift investment in new technologies at a time of falling profit.

Elliott also wanted a total of five board nominees at Hyundai Motor and Hyundai Mobis to address “governance shortcomings”, mentioning investments in non-core assets including a $10 billion land acquisition in Seoul’s Gangnam business district.

As of November, Elliott held over 2.5 percent of common stock in Hyundai Mobis, 3 percent in Hyundai Motor and 2.1 percent in affiliate Kia Motors.

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