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Activist Investor Elliott Management Steps Up Pressure on Hyundai Motor Group

April 23, 2018
Demands range from higher dividends to restructuring the group under a holding company.

Elliott Management Corp., which earlier this month announced it bought about $1 billion in shares of units of Hyundai Motor Group, stepped up its pressure on the South Korean conglomerate by making demands ranging from higher dividends to restructuring the group under a holding company.

Elliott’s proposals, which include combining Hyundai Motor Co. with Hyundai Mobis Co. and raising dividends to as much as half of net income, have been relayed to the board of Hyundai Motor Group, it said. Group representatives weren’t immediately available to comment.

Other demands include:

  • Reduction of excess cash on balance sheet at Mobis and Hyundai Motor
  • Cancellation of all existing and future treasury shares
  • Addition of three independent board members
  • Introduction of measures to bring group governance to be in line with global standards

The demands signal the beginning of what could evolve into a contest pitting one of the world’s most tenacious activist investors against Korea’s second-largest business empire. For Hyundai’s founding family, Paul Singer’s investment comes at a tricky time as the group’s 80-year-old patriarch Chung Mong-koo prepares to hand over control of the conglomerate to his son.

Singer’s acquisition of stakes in three group units -- those of Hyundai Motor, Kia Motors Corp. and Hyundai Mobis -- were announced earlier this month, marking his return to Korea. Three years ago, Singer launched a campaign for reforms at the nation’s biggest conglomerate, Samsung Group, and narrowly lost in a proxy fight, while playing a key role in events that led to the impeachment of the country’s president and the jailing of Samsung’s de-facto leader.

By Sohee Kim

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Licensed content from Bloomberg, copyright 2016.

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