April 25, 2024

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[THE INVESTOR] A high-ranking government official said on April 5 that Elliott Management’s recent calls on Hyundai Motor to improve its corporate governance shouldn’t be compared to the quasi-activist hedge fund’s proxy battle with Samsung back in 2015.

“It doesn’t seem like there’s much to be concerned about, since things are quite different from the last time,” Financial Services Commission Chairman Choi Jong-ku told reporters on the sidelines of a KOSDAQ event. 

Hyundai Motor Group Chairman Chung Mong-koo (left) and his son Eui-sun

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Choi predicted that the situation could be resolved through “appropriate channels” between the management and shareholders.

A day before, Elliott had issued a press release titled “Elliott Welcomes Hyundai’s Acknowledgment of Needed Reforms.” In it, the New York-based hedge fund outlined an upbeat outlook about the steps Hyundai Motor recently announced to cut its governance clutter and improve operations.

The Korean auto company had said it would spin off lucrative units of Hyundai Mobis -- its de facto holding company -- and merge them with another affiliate, Hyundai Glovis.

On April 3, Elliott Management revealed it holds just over 1 trillion won (US$942.93 million) in three of Hyundai Motor affiliates including Hyundai Mobis. The hedge fund also called on the carmaker to make sure it comes up with a detailed roadmap for implementing its planned reforms.

“It seems like Elliott Management perceives Hyundai’s plans in a positive light,” said Lim Eun-young, an analyst at Samsung Securities. “Back then with Samsung, Elliott was adamantly against it from the beginning.”

Nine days after Samsung announced a merger between Samsung C&T and Cheil Industries, the hedge fund had opposed the move saying it infringed on shareholder interests, and was a thinly veiled attempt to facilitate the succession of power to heir-apparent Lee Jae-yong.

Another industry source pointed out that unlike Samsung, which either stonewalled or lashed out at Elliott, Hyundai is keeping all communication channels open. Executives from the hedge fund are scheduled to meet with their Hyundai Motor counterparts in Seoul next week.

The Korean firm is also actively articulating its recent reform plans to shareholders at both home and abroad. Company officials recently wrapped up IR sessions in Korea on the issue, and are currently touring North America, Europe and Asia.

Elliott Management is estimated to hold a 2.2 percent stake in Hyundai Mobis worth around 570 billion won. Its stakes in Hyundai Motor and Kia Motors are said to be below 1 percent.

By Song Seung-hyun (ssh@heraldcorp.com)