NPS holds key in HMG-Elliott showdown
By Nam Hyun-woo
The looming voting showdown between Hyundai Motor Group (HMG) and U.S. activist fund Elliott over the spinoff-merger of Hyundai Mobis will likely be determined by the National Pension Service (NPS), as the automaker tries to persuade shareholders to approve the plan.
According to industry sources Monday, HMG started asking shareholders to approve of the Hyundai Mobis spinoff. Also, securities firms began receiving applications from shareholders who oppose the plan and want to exercise their appraisal rights.
The processes are prior to a May 29 shareholder meeting of Mobis, in which shareholders will vote for or against the group's bid to spinoff the auto parts maker's business divisions and merge them into Hyundai Glovis, the group's logistics unit.
The spinoff-merger is the first step in the group's proposed plan to restructure, which will have Mobis at the top of the group's governing structure and under the HMG owner family's control.
The plan is opposed by Elliott, which claims it lacks a sound business rationale and the share swap ratio between Mobis and Glovis is unfair for Mobis shareholders. Though the hedge fund's stake in Mobis is estimated at 1.6 percent, it is believed to be influential because it is taking the lead in urging shareholders to oppose the plan.
Analysts say this gives the NPS, which is the second largest shareholder in Mobis (9.82 percent), the decisive vote in HMG's restructuring plan.
Currently, Kia Motors, one of HMG's car making units, is the single largest shareholder in Mobis with 16.88 percent. Adding that to the 6.96 percent held by HMG Chairman Chung Mong-koo, the 5.66 percent of Hyundai Steel and the 0.67 percent of Glovis, the total friendly stakes for HMG's plan is 30.17 percent, which gives extra significance to the NPS's nearly 10 percent stake.
“The most important shareholder, the NPS, has yet to show its stance on the spinoff-merger bid,” Eugene Investment & Securities analyst Lee Jae-il said. “It is as if the NPS is holding the key to HMG's bid to defend its plan.”
The NPS is being prudent before making another important decision that can sway Korea's business circle.
The NPS has faced questions over its investment function as its approval of the merger of Samsung C&T and Cheil Industries in 2015 stirred controversy over its involvement in the corruption scandal that dethroned former President Park Geun-hye.
Also, currently, the NPS chief investment officer post is vacant as former NPS Chief Investment Officer Hong Wan-seon was jailed for abuse of power in the Samsung C&T merger.
Thus, industry watchers expect the pension operator will be more open to the opinions of outside counselors, such as the Institutional Shareholder Services (ISS) and the Korea Corporate Governance and Service (KCGS).
According to industry officials, the ISS and the KCGS are expected to release their opinion about the HMG restructuring plan this week.
Another factor that will affect the meeting will be the stock price of Mobis. Mobis has set 233,429 won per share as the price for the appraisal right. If Mobis' stock price falls below this, shareholders who oppose the spinoff-merger can oblige Hyundai to buy back their shares at that price.
Mobis has been fluctuating between 231,000 won and 237,000 won last week, but ended at 240,000 won Monday, up 1.27 percent from the previous session.