Hyundai empress trumps brother-in-law
Has Hyundai Motor Group been pushed into burying the hatchet with Hyundai Group or was it a planned move coming from the chairman’s heart?
The peace-making initiative by both Hyundai Motor Group and Hyundai Group came earlier than expected and somewhat abruptly.
It was the JoongAng Ilbo, a national daily with the second highest circulation and therefore massive power, which broke the news that the automaker’s Chairman Chung Mong-koo ordered the attempt for a truce.
The report was reprinted by numerous media outlets, and Hyundai Group, led by Chung’s late brother’s wife Hyun Jeong-eun, released a statement within a day, saying that it would no longer seek to disrupt the automaker’s acquisition of Hyundai Engineering & Construction (HE&C).
Hyundai Group had been chosen as the preferred bidder to buy the builder, but was deprived of its status when creditors of the builder decided its funding plan for the acquisition was dishonest.
The firm asked a district court and a high court to stop the creditors from cancelling the preliminary deal, but both were dismissed. The group said it was considering taking the case to the Supreme Court.
Abandoning the plan was the group’s “specific” gesture for reconciliation, so it publicly urged Hyundai Motor Group to respond by coming up with “formal and specific suggestions for harmony” before the automaker and the creditors finalize the acquisition.
When Hyundai Group issued the release, Hyundai Motor Group, specifically its press office, was dumbfounded. It denied most of the allegations made in the Joongang Ilbo article, but wasn’t bold enough to issue an official denial.
The newspaper quoted a high-ranking official of the automaker, and it would be nearly impossible for the company to track the person and verify what he or she said.
For the automaker, the notion that it approached Hyundai Group first for reconciliation was bewildering. The consensus at the firm was, “Hyundai Group provoked us with offensive television and newspaper ads. If one has to make a move for peace, it should be Hyundai Group, not Hyundai Motor Group.”
Two hours after Hyundai Group’s statement, however, its stance switched dramatically. It responded with an official statement that said, “We welcome Hyundai Group’s decision to stop the legal disputes. We look forward to negotiating under conditions of mutual trust to seek ways for harmony and a win-win situation.”
It left this reporter wondering if the automaker had been forced to do so because doing otherwise would be bad publicity or if the chairman’s good intentions had finally been checked and verified.
Whatever the reason was, reconciliation won’t be as easy as shaking hands. The process is likely to involve money, which could even affect the market.
An industry source close to Hyundai Group said, “The confrontation was motivated by business matters rather than personal consideration by the two firms. Therefore, settling the dispute should be done above a personal level. Some business deals are likely to be involved.”
One way that the media speculates is the automaker passing HE&C’s 7.75 percent stake of Hyundai Merchant Marine (HMM) to Hyundai Group.
The stake was considered essential for Hyundai Group to maintain control over the flagship affiliate.
Hyundai already has more than a 45 percent stake in HMM after the logistics firm raised capital by issuing more stocks. That share gives the group a firm grip on HMM, but for the group, working with a family member would be better than relying on strategic partners who are, at the end of the day, after profits.
That process requires a great deal of negotiations such as discussing how to value HE&C’s HMM shares.
The two Hyundais may see key progress next week when the Chung family hosts the 10th anniversary of founder Chung Ju-yung’s death with a concert and a photo exhibition in memory of the founder.
Chung Mong-koo and Hyun Jeong-eun are bound to face each other at the Sejong Center for the Performing Arts on March 14, and it is expected that they will have a thorough talk.