Elliott sells off over $1 bn shares in Hyundai Motor, two affiliates in two yrs

  • 2020-01-23

Elliott Management Corp. has disposed of all its shares in three key units of the Hyundai Motor Group, currently worth $1.5 billion, after its nearly two-year attempt to overhaul the governance structure of the family-controlled group fell through.

Around the time Elliott sold off the shares in late 2019, it held 2.9% of Hyundai Motor Co., 2.6% of Hyundai Mobis Co. Ltd. and 2.1% of Kia Motors Corp. They are valued at 1.76 trillion won ($1.5 billion) at current market price.

“Elliott’s name disappeared from their shareholder lists at the end of last year,” an industry banking source told the Korean Investors on Jan. 22.

In April 2018 the US hedge fund disclosed a $1 billion shareholding in the companies. About a half month later, it called on the Korean automotive group to convert into a holding company structure by combining Hyundai Motor with Mobis, and demanded 8.3 trillion won ($7.1 billion) in dividends.

But Elliott’s calls, including the dividend payouts and outside board appointments, were finally rejected at general shareholder meetings of Hyundai Motor and Mobis in March 2019.

At one time the activist fund was estimated to have lost about 500 billion won in valuation from the shareholding, or 30% of its investment in the three companies.

Hyundai Motor shares are now traded at around 120,000 won, down from 150,000-160,000 won in early 2018.

“When Hyundai Motor shares rebounded to close to 130,000 won, Elliott seemed to decide to pull out after it recouped some losses,” said another IB source.

UNCERTAINTY REMOVED

The disposal of shares by Elliott may remove one of the major negative factors dragging down the automotive group and help speed up Hyundai Motor’s push into new growth businesses.

In September 2019, Hyundai Motor Group announced a 2.4 trillion-won joint venture launch with the US self-driving software company Aptive.

Elliott had called on the automotive group to return billions of dollars in retained earnings to shareholders, or use them for mergers or acquisitions for new growth.

Hyundai Motor was the second South Korean conglomerate locked in a battle with Elliott.

In 2015, the US hedge fund sought to block the merger between Samsung Corp. and Cheil Industries Ind. and in 2016 pressured Samsung Electronics Co. Ltd. to convert into a holding company and cancel treasury shares.

Since then, the Samsung Group units has unveiled shareholder friendly steps, including treasury share cancellation and generous dividend payouts.

By Chayeon Kim

Why29@hankyung.com

<Edited by Yeonhee Kim>

(Photo: Getty Images Bank)