Elliott Management Corp. has renewed its pressure on Hyundai Motor Group to revamp its governance structure.
In May, the U.S. activist hedge fund forced the Korean automotive group to scrap a governance reform plan, which it asserted failed to protect shareholders’ interests.
According to Bloomberg News, Elliott sent a letter to Hyundai on August 14, calling for a restructuring of key units to improve shareholder value and the group’s structure. It disclosed the letter to the public on Sept. 7.
In the letter, Elliott proposed that Hyundai Mobis Co., the group’s car parts producer, sell its after-sale service unit to Hyundai Motor Co., and then merge with Hyundai Glovis Co., a logistics affiliate.
The fund also proposed that the merged Mobis-Globis entity buys shares of new post-merger Hyundai Motor Co. from the group’s owner family, including group chairman Chung Mong-koo.
Under this arrangement, the merged Mobis-Glovis entity could sit atop the group’s hierarchy and own a controlling stake in Hyundai Motor Co., the flagship of the automotive group.
Elliott also suggests that the group’s owner family buy stakes in the merged Mobis-Globis entity to maintain their control of the entire group.
It also proposed that Hyundai Motor Co. return excess cash to shareholders via interim or quarterly dividends.
Elliott also invited Hyundai to discuss its latest proposals, advising it to set up a restructuring review committee to come up with a restructuring plan for the group.
Hyundai Motor declined the offer, according to media reports, citing possible breaches of local rules.
Hyundai Motor Group declined to comment on the letter or whether it rejected Elliott’s request for discussions. “While our current focus and strategic priorities are on improving operations across the company, we hope to share our thoughts on how to improve shareholder value with all of our shareholders in due course,” the company said in a statement.
Elliott’s proposal comes as Hyundai seeks to figure out how to reform its governance structure so that heir-apparent Chung Eui-sun, the chairman’s only son and group vice chairman, can take control of the automotive giant from his father.