Hyundai Motor hires Goldman, top law firm to fend off Elliott’s reform call

  • 2018-04-25

Hyundai Motor Group has bolstered the roster of its advisors with the addition of Goldman Sachs and US law firm Latham & Watkins LLP to step up fight against activist fund Elliott Management Corp. which increased pressure on the auto giant to simplify its ownership structure.

The hiring of Goldman and the world’s No. 2 law firm by gross revenue came a day after Elliott called on the South Korean automaker to adopt a holding company by merging Hyundai Motor Co. with its affiliate Hyundai Mobis Co. Ltd., according to investment banking sources on April 24.

“It is impossible for Hyundai Motor to accept the call for converting into a holding company,” said one of the sources. “Now that Elliott started the fight, Hyundai will defend against it and push forward with its corporate structure improvement plan as it is.”

Both Goldman and Latham had worked for Samsung Electronics Co. Ltd. and US listed companies respectively between 2015 and 2017, in their fight against Elliott Management which demanded their corporate structure overhauls to enhance shareholder value.

Hyundai has been already advised by Kim & Chang, South Korea’s biggest law firm and accounting firm Samil PwC for one year to streamline its shareholding structure, in response to calls from the government and investors to reform.

The two Seoul-based advisory firms came up with proposals to streamline the circular shareholding structure of the auto giant, instead of transforming it into a holding company.

Last month, Hyundai announced a plan to spin off the module and after-service parts businesses of parts maker Hyundai Mobis and to combine them with logistics company Hyundai Glovis Co. Ltd.

In late February, NH Investment & Securities Co. Ltd. was added to the advisor roster to work on shareholding declarations by Hyundai Motor Group’s listed units.

On April 3, however, Elliott dismissed the reform plan as insufficient, disclosing a $1 billion shareholding in the affiliate companies of the Hyundai Motor Group.

Goldman advised Samsung Electronics in 2015 when Elliot pressured the world’s largest smartphone maker to convert into a holding company and cancel treasury shares.

Samsung rejected the call for a holding company structure, but increased dividends and canceled treasury shares.

Latham & Watkins, founded in 1934, served as legal counsel for Cognizant Technology Solutions Corp. and NRG Energy when they faced calls from Elliott Management to improve corporate structures.

By Hugh YH Jeong

hugh@hankyung.com

<Edited by Yeonhee Kim>

Photo: Getty Images Bank