Antitrust chief calls Hyundai Motor’s governance restructuring ‘right direction’

SEOUL, April 20 (Yonhap) — The head of South Korea’s antitrust regulator said Friday that Hyundai Motor Group has taken a step in the right direction, citing its latest plan to streamline its complicated governance structure through business spinoffs and mergers.

In a meeting with foreign correspondents in Seoul, Korea Fair Trade Commission Chairman Kim Sang-jo said, “Unexpectedly, Hyundai Motor Group opted to pay 1 trillion won (US$935 million) in transfer tax for future stock transactions of the group’s large shareholders (in the process of simplifying the group’s governance structure) instead of choosing a holding company structure that would help tighten the large shareholders’ grip on the group.”

The company confirmed his comments in a press gathering.

The large shareholders of Hyundai Motor Group referred to in the comment are Chairman Chung Mong-koo and his only son, Vice Chairman Eui-sun.

Kim, formerly called a ‘chaebol sniper,’ cited Hyundai Motor’s case as “the most desirable” one for local conglomerates that are required to restructure their circular cross-shareholding structures largely aimed at strengthening family control.

In late March, Hyundai Motor Group announced that auto parts supplier Hyundai Mobis Co. will spin off its domestic module and after-sales parts businesses and merge them with logistics affiliate Hyundai Glovis Co.

After the spinoff and merger, Hyundai Mobis plans to focus on further beefing up its core auto parts operations and R&D business, as well as on developing future growth drivers like autonomous vehicles and connected cars.

Moreover, the group’s chairman and his heir apparent plan to acquire all Hyundai Mobis shares held by Kia Motors Corp., Hyundai Glovis and Hyundai Steel Co. to simplify the group’s governance structure.

Kia, Hyundai Glovis and Hyundai Steel currently own 16.9 percent, 0.7 percent and 5.7 percent stakes, respectively, in Hyundai Mobis.

The move comes after the country’s antitrust regulator asked the group to come up with a concrete plan to overhaul its complicated shareholding structure among affiliates by the end of March.

All the plans are subject to approval at Hyundai Mobis and Hyundai Glovis’ general shareholder meetings scheduled for May 29.

Early this month, Hyundai’s streamlining plan was welcomed by Elliott Advisors Ltd., a unit of U.S. activist hedge fund Elliott Management Corp.

The U.S. fund said it acquired more than $1 billion worth of stocks in the group’s three affiliates — Hyundai Mobis, Hyundai Motor and Kia Motors.

“While this step is encouraging, more needs to be done to benefit the companies and stakeholders,” Elliott said in a statement, calling for a detailed roadmap to further enhance the South Korean auto giant’s corporate governance, optimize balance sheets and enhance capital returns at Hyundai affiliates.

Elliott said it looks forward to engaging with management and other shareholders directly on these issues, and offering recommendations regarding the proposed plan.

kyongae.choi@yna.co.kr

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