Wrench in the plans

29 March 2018 By Robyn Mak Follow @mak_robyn

South Korea’s second-largest conglomerate is finally moving to simplify its elaborate corporate structure. But the first stage of the rejig short-changes minority investors in a key unit. The controlling Chung family might have to improve the terms to get this done.

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South Korea's second-largest conglomerate, Hyundai Motor Group, on March 28 announced a restructuring aimed at simplifying its complex corporate structure, which includes circular shareholdings.

Hyundai Mobis, a key affiliate that specialises in auto parts, will sell two businesses to a sister company, Hyundai Glovis. In return, Mobis shareholders will get 0.61 new shares of Glovis for each share they hold in Mobis.

Chairman Chung Mong-koo and his son, Chung Eui-sun, who is vice-chairman, will then buy stakes in Mobis from two other units, Kia Motors and Hyundai Steel. This will result in Mobis being at the top of Hyundai's ownership structure, with the Chungs owning roughly 30 percent, a company source told Reuters.

The Mobis-Glovis deal requires approval from both sets of shareholders. Meetings are due on May 29.

Glovis shares rose 7.5 percent by late morning in Seoul on March 29, to 186,5000 won. Mobis shares fell 3.8 percent to 251,500 won.

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