Hyundai Motor to streamline corporate governance structure

By Lim Chang-won Posted : March 28, 2018, 18:29 Updated : March 28, 2018, 18:29

A file picture shows Hyundai auto group chairman Chung Mong-koo. [Courtesy of Hyundai Motor ]


SEOUL -- South Korea's Hyundai auto group vowed Wednesday to streamline its complicated governance structure under government pressure to overhaul a complicated web of cross-shareholding among group units and enhance transparency in its management.

The group said it would split and spin off the module manufacturing and after-sales parts business of its parts maker, Hyundai Mobis, and merge it with logistics firm Hyundai Glovis, a logistics unit.

Hyundai Mobis, which has played a key role in the group's cross-shareholding structure, said it would focus on its core parts-making business.

Group Chairman Chung Mong-koo and his son, Vice Chairman Chung Eui-sun, will acquire all Hyundai Mobis shares held by three units -- Kia Motors (16.9 percent), Hyundai Glovis (0.7 percent) and Hyundai Steel (5.7 percent). The purchase of shares requires at least 4.5 trillion won (4.2 billion US. dollars) at current market prices. 
 
The chairman and his won would sell their holdings in other group units to raise money for reforms and pay taxes.

"We will strengthen competitiveness in the future auto parts business and strengthen our expertise by focusing on our key parts business in response to changes at home and abroad in the automobile industry through split and merger," Hyundai Mobis said in a statement.

State regulators have urged top family-run conglomerates, or chaebol, to reform their unfair business activities and reduce their market dominance. The Fair Trade Commission (FTC) has put Samsung, Hyundai Motor, SK and LG groups under strict surveillance. Cross-shareholding among group affiliates has used by chaebol owners to control their entire group with small stakes.

President Moon Jae-in has described chaebol's unfair business practices as "old evils" that should be eradicated, revealing antagonism to their dominant role in South Korea's economy.
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