KB Securities said in a report released on May 17 that the likelihood of Hyundai Mobis shareholders voting againt the group’s plan to transfer its two lucrative business units to Hyundai Glovis has increased. It warned that related stock prices could be negatively impacted in the short term.
Earlier, the Institutional Shareholder Services and Glass Lewis, the world's two leading proxy advisory firms, advised Hyundai Mobis shareholders to oppose the spin-off plan at the company’s general shareholders’ meeting on May 29.
"Foreign shareholders had a 47.7% stake in Hyundai Mobis as of May 15, and the two proxy advisory firms’ influence will be absolute," said KB Securities researchers Kang Sung-jin and Kim Jun-seop.
"The opposition by the two proxy advisory firms has made the plan more likely to be rejected,” they added. “This may impact stocks of Hyundai Glovis and Hyundai Mobis in the short term.”
However, they noted that the stock prices of the two companies were already significantly affected by an increasing possibility of the plan being voted down. “As Hyundai Mobis will have a higher target price when the plan is rejected, a stock price adjustment will end in the short term,” they said.
"Even if the spin-off and merger plan is rejected at the general shareholders' meeting, Hyundai Motor Group will push for governance reform in a different way," they said. "The group will come up with a new plan as it needs to ensure a smooth succession of management rights.” They ruled out the possibility of the group adopting a holding company system.