US hedge fund Elliott Management has presented a governance structure improvement scheme targeting the Hyundai Motor Group. Its demands include a merger between Hyundai Motor Company and Hyundai Mobis.
The activist hedge fund released a report titled Accelerate Hyundai Proposals on April 23, claiming that the merger will turn the holding company of the group into a highly competitive automaker and simplify its complex shareholding structure in an efficient way.
Elliott Management also mentioned that every current and future treasury stock needs to be subjected to retirement to deal with the overstated financial statements of Hyundai Mobis and Hyundai Motor Company and the fair values of the Hyundai Mobis and Hyundai Motor Company shares owned by Kia Motors need to be examined for conversion into assets.
In addition, the hedge fund demanded three new experienced outside directors along with clear dividend policy for a dividend payout ratio of 40% to 50% of the net profit. It also remarked that the Hyundai Motor Group’s own reorganization plan is unclear in terms of the profit to be returned to minority shareholders and cross-shareholding removal alone is not enough as management structure improvement.
It added that most of the Hyundai Motor Group shareholders who read the proposals expressed their support and it is convinced that the proposals will be beneficial to every interested party.