By Hyunjoo Jin and Ju-min Park
SEOUL (Reuters) - South Korea's antitrust chief on Thursday said U.S. activist fund Elliott Management's proposal for Hyundai Motor Group to adopt a holding company structure is "inappropriate" and, if implemented, would be in violation of antitrust law.
The proposal includes Hyundai's financial subsidiaries falling under the ownership of a non-financial entity, which is prohibited by law, Yoon Soo-hyun, a spokesman at the Korea Fair Trade Commission, said in confirmation of the commissioner's comments made at an event in Seoul.
Elliott on Monday said the restructuring plan of South Korea's second-largest conglomerate was insufficient. Instead, it called on the autos-to-steel group to introduce a holding company structure, boost shareholder returns and appoint more independent board members.
Elliott proposed Hyundai Mobis Co Ltd (KS:012330) be combined with Hyundai Motor Co (KS:005380) to create a holding company which would also include financial subsidies such as Hyundai Capital and Hyundai Card Co Ltd [HYMTRH.UL].
Kim Woo-chan, a finance professor at Korea University Business School, said Hyundai was unlikely to accept the proposal on the holding company because it does not involve Hyundai Glovis Co Ltd (KS:086280), whose biggest shareholder is Hyundai Motor's vice chairman and heir apparent, Chung Eui-sun.
"Elliott's proposal is unrealistic," the professor said.