Hyundai Mobis drops spin-off plan in the face of opposition (updated)

Hyundai Glovis

21/05/2018 09:30

(Adds background)
    SEOUL, May 21 (Reuters) - South Korea's Hyundai Mobis Co Ltd
 012330.KS  on Monday said it has dropped a restructuring
proposal due to "uncertainty" about gaining shareholder approval
next week in the face of opposition from U.S. hedge fund Elliott
Management Corp and other investors.
    The move is a setback for parent Hyundai Motor Group, which
is widely seen as using the proposal as a stepping stone for
generational succession and to reduce regulatory risk. 
    It comes after proxy advisors at home and abroad joined
Elliott in opposing the plan, which involves spinning off part
of Hyundai Mobis' business and combining it with group affiliate
Hyundai Glovis Co Ltd  086280.KS .
    Elliott and other critics have said Hyundai Mobis is
transferring its cash cow to a less-related affiliate in which
the top shareholder is Vice Chairman Chung Eui-son, who is
preparing for father-to-son succession. 
    Hyundai Mobis has cancelled a May 29 shareholder meeting
where the plan was to be put to a vote. The firm needed
two-thirds of votes of shareholders present.
    "Hyundai Mobis will withdraw the proposal in its current
form in order to have an opportunity to supplement and improve
the restructuring plan, including the proposed spin-off merger,"
Chief Executive Lim Young-deuk said in a letter to shareholders.
    Board members have not yet discussed alternative proposals,
such as whether to revise terms of the plan, a person familiar
with the matter told Reuters on condition of anonymity.
    Hyundai Motor Group in March announced a plan to streamline
its ownership structure through a series of deals, responding to
calls from the government and investors to reduce circular
ownership structures.

 (Reporting by Hyunjoo Jin and Joyce Lee
Editing by Darren Schuettler and Christopher Cushing)
 ((hyunjoo.jin@thomsonreuters.com; 82-2-3704-5685; Reuters
Messaging: hyunjoo.jin.thomsonreuters.com@reuters.net))