Hyundai Board Pleas for Shareholder Support in Proxy Fight

Hyundai Motor Co. CEO Lee Won-hee is urging shareholders to accept an $8.8 billion restructuring plan that opposition investors say mainly benefits the company’s controlling family.

Both sides seek to simplify the company’s circular cross-ownership. Currently, Hyundai Mobis owns 20.8% of Hyundai Motor, which owns 33.9% of Kia Motors, which owns 16.9% of Hyundai Mobis.

Hyundai management proposes that the controlling Chung family sell down its 30% stake in a fourth unit, logistic service Hyundai Glovis, and merge it with partsmaker Hyundai Mobis.

Lee says the scheme resulted from the board’s “desperate view” that the group’s current structure can’t guarantee sustainable growth. He says the move will enhance transparency and make the group more competitive.

Not so, opposition investors declare. They complain that the board’s plan provides no clear business rationale and fails to explain what synergies might result. One group condemns the deal as “profoundly unattractive” for Mobis shareholders.

U.S. activist fund Elliott Management, which has amassed more than $1 billion in shares in the group, claims at least 50% more value could be unlocked simply by merging Mobis and Hyundai Motor. Shareholders will vote on the proposals on May 29.