(ATTN: ADDS details in 4th para and Chung’s comment on Genesis sedan in last para)
SEOUL, May 11 (Yonhap) — Hyundai Mobis Co., South Korea’s largest auto parts company by sales, is considering acquiring an electronic auto component maker to stay ahead in future car technologies, the company said Friday.
In a recent interview with a foreign newswire service, Hyundai Motor Group Vice Chairman Chung Eui-sun, 47, said Hyundai Mobis is “looking at four to five electronic auto parts companies for strategic mergers and acquisitions to secure a future growth driver.”
The only way for Hyundai Motor Group to survive is to transform itself into a company that can challenge advanced information, communication and technology (ICT) companies, the only son of Hyundai Motor Group Chairman Chung Mong-koo said.
The world’s fifth-biggest carmaker by sales has increased investments in the development of future vehicles, such as autonomous and hydrogen fuel-cell electric vehicles, to compete with global rivals, with Hyundai Mobis leading those efforts.
This undated Yonhap News TV image shows Hyundai Motor Group Chairman Chung Mong-koo (L) and his only son and heir apparent Vice Chairman Chung Eui-sun. (Yonhap)
Given this, it is not surprising Hyundai Mobis is at the center of the group’s latest plan to streamline its complicated governance structure through business spinoffs and mergers.
In March, the Korean auto giant announced it will simplify its governance structure through spinoffs and mergers among affiliates despite the need to pay taxes that will arise in the streamlining process. It opted not to seek a holding company structure.
Under the reorganization plan, Hyundai Mobis will spin off its domestic module and after-sales parts businesses and merge them with logistics affiliate Hyundai Glovis.
After the spinoff and merger, Hyundai Mobis plans to focus on further beefing up its core auto parts operations and R&D business and developing future growth drivers like autonomous vehicles and connected cars.
Moreover, large shareholders, such as Chairman Chung and his son Eui-sun, 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.
All the plans are subject to approval at Hyundai Mobis and Hyundai Glovis general shareholder meetings scheduled for May 29.
As for Hyundai’s streamlining efforts, Elliott Advisors Ltd., a unit of U.S. activist hedge fund Elliott Management Corp., initially welcomed the step as “encouraging” as a holder of more than US$1 billion worth of stock in Hyundai Mobis, Hyundai Motor and Kia Motors. But it has led an opposition campaign calling for additional efforts to enhance shareholders’ value.
On Friday, the U.S. fund said it will vote against the reorganization plan by Hyundai Motor Group. It has demanded the group adopt a holding company structure and take solid steps for minority shareholders.
Acknowledging there are things to be improved further for the benefit of shareholders, the Vice Chairman Chung said, “Hyundai Mobis’ transformation into an advanced technology-focused parts supplier will ultimately drive up earnings and returns for investors.”
Meanwhile, to help boost sales, Hyundai Motor Group is considering launching its Genesis-badged luxury cars in the Chinese market as early as next year, with the aim of achieving tangible results within three to four years, Chung said.
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