Hyundai Motor to reignite succession drive


Chung Mong-koo Hyundai chairman	Chung Eui-sun Hyundai vice chairman

By Park Jin-hai

Hyundai Motor Group is expected to resume the botched sale of the owner family's Hyundai Glovis stakes, with the group's succession scheme centering on Hyundai Mobis, analysts said Thursday.

"If the block deal had been made, Hyundai Motor Group could have saved 10 billion won in tax annually as it could have resolved the anti-trust issue related to intra-group dealings," said Meritz Securities analyst Kim Seung-chul. "Therefore, the group will most likely resume the block deal."

The country's revised anti-trust law bans business group owners and their family members from holding more than 30 percent stakes in affiliates that earn more than 20 billion won annually or 12 percent of annual sales through intra-group dealings.

In 2013, Hyundai Glovis earned nearly 3 trillion won from doing business with its affiliates, accounting for about 30 percent of its 10.2 trillion won annual sales.

HI Investment & Securities analyst Ko Tae-bong agrees.

"Previously, regarding corporate governance restructuring, one of the most plausible scenarios was the merger between Hyundai Glovis and Hyundai Mobis," he said.

"Through the deal this time since the market has learned that Hyundai Motor chairman Chung Mong-koo has no interest in merger," said Ko.

He said the scenario that the automotive group sells Hyundai Globis stakes and with the cash secures Hyundai Mobis stakes had become more convincing.

Hyundai Motor said chairman Chung and his heir Chung Eui-sun failed to sell a combined 13.4 percent stake in Hyundai Glovis, or 5.02 million shares.

Several institutional investors showed interest in acquiring shares, but the sides failed to iron out differences over the price and other terms, according to the company.

Chairman Chung holds 11.51 percent of Hyundai Glovis, while his son has 31.88 percent. The block sale would have raised about 1.5 trillion won ($1.4 billion won).

"As the deal has become futile and share prices fluctuate, the company should review its corporate governance restructuring scenario," said Korea Investment & Securities analyst Kim Jin-woo. "But one thing that cannot change is that securing Hyundai Mobis stakes is most crucial in its father-to-son succession."

Meanwhile, Taurus Investment & Securities analyst Yoo Ji-woong said the group would shed Hyundai Glovis shares, but in a different way to a block deal.

"A more credible theory is dividing Hyundai Mobis into a holding company and an operating company, and merging the holding company with Hyundai Glovis with Junior Chung as a controlling shareholder," Woo said.

"In this case, he would be elevated into the largest shareholder."

Hyundai Mobis inched up 1.57 percent to close at 259,000 won. Hyundai Glovis jumped 2.59 percent to close at 237,500 won, bouncing back up from its two-day losing streak which had been triggered by Hyundai Motor Group Chairman Chung Mong-koo and his son's failed attempt to sell off their shares in the logistics unit.

The benchmark Korea Composite Stock Price Index (KOSPI) edged up 0.48 point to end nearly unchanged at 1,914.14.

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