SEOUL, April 27 (Korea Bizwire) – Elliott Advisors Ltd., a unit of U.S. activist hedge fund Elliott Management Corp., on Friday reiterated its demand for a holding company structure for Hyundai Motor Group.
In a statement, the U.S. fund called on the Korean automotive group to merge Hyundai Motor Co. and Hyundai Mobis Co. into one company and then turn it into a holding company for the entire conglomerate.
It said once such a holding company has been set up it can spin off financial affiliates under its wing within the two-year grace period, as required under South Korea’s fair trade laws, a spokeswoman representing Elliot Advisors in Seoul said.
Under the Monopoly Regulation and Fair Trade Act, a holding company in the manufacturing sector is strictly prohibited from controlling a financial affiliate.
Elliott’s insistence on a holding firm structure for Hyundai comes after Korea Fair Trade (FTC) Commission Chairman Kim Sang-jo said Thursday that the U.S. fund’s stance conflicted with the country’s existing fair trade regulations.
Last month, Hyundai Motor Group announced it will simplify its governance structure through business spinoffs and mergers despite the need to pay taxes that will arise in the streamlining process. The conglomerate opted not to seek a holding company structure.
Related to the move, the FTC chief at the time called Hyundai Motor’s decision “the most desirable” one for local conglomerates that are required to restructure their circular cross-shareholding structures largely aimed at allowing the so-called owning families to control large numbers of businesses without actually holding significant shares in them.