(Bloomberg) -- Hyundai Motor Group shelved a controversial $8.8 billion deal between two units after activist hedge fund Elliott Management Corp. balked at the proposal on grounds that it would shortchange minority investors.
Hyundai Mobis Co. on Monday decided to withdraw the proposal, Chief Executive Officer Young-Deuk Lim said in a letter to investors on Monday. The company, which had originally scheduled to put the matter to a shareholders’ vote on May 29, will seek approval for an updated restructuring plan at a later date, he wrote.
"Our communications with our shareholders and the market regarding the need for the restructuring were insufficient," Lim said. "Hyundai Mobis will withdraw the proposal in its current form in order to have an opportunity to supplement and improve the restructuring plan."
Billionaire Paul Singer’s Elliott, which bought more than $1 billion in shares of Hyundai units, has been leading a campaign since last month to oppose the transaction, questioning the deal’s logic and voicing concerns that minority shareholders would lose out. The fund won the support of the world’s two most influential proxy advisory firms -- Glass Lewis & Co. and Institutional Shareholder Services Inc. -- who recommended investors vote against the proposal.
A representative for Elliott declined to comment.
The original deal called for Mobis selling two major businesses to affiliate Hyundai Glovis Co. Mobis shares climbed 1.1 percent to close at 241,500 won on Monday, while Glovis increased 0.7 percent. Hyundai made its announcement after the close of trading in Seoul.
(Updates with details from second paragraph.)
To contact the reporter on this story: Sohee Kim in Seoul at skim847@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Sam Nagarajan
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