The founding family of Hyundai Motor Group, the fifth-biggest auto manufacturer in the world, failed to sell a stake in a logistics affiliate, impairing chairman Chung Mong-koos plans to hand control of the conglomerate over to his son.
According to a person with knowledge of the matter, the Chairman of Hyundai Motor Co. and his oldest son Chung Eui-sun failed to sell a $1.25-billion block of shares in the groups logistics arm Hyundai Glovis.
The reasons for the unsuccessful sale were not immediately clear, but according to some fund managers the stake was too large for the market to take in a single transaction.
The Chief Executive Officer of Midas International Asset Management Ltd – Heo Pil Seok – commented for Bloomberg: “The family’s decision to sell Glovis shares, and to sell them to unrelated investors in the market, was completely unexpected. Investors were probably worried that this meant the family would be withdrawing their interest in Glovis, and that its share price had reached a high point.”
Hyundais chairman and his son had plans to sell a total of 5.02 million shares in the groups shipping and logistics arm in the range from KRW264 000 to KRW277 500 each (from $244 to $257 apiece). This price represented a range of 7.5% to 12.0% below the shares closing price on January 12th.
The founding family has been trying to reduce its holdings in Hyundai Glovis from 43.39% to below 30% to meet new antitrust regulations designed to limit related transactions.
The group explained in an e-mail today that the deal was not carried out as some of its terms were not met, bringing new problems for Hyundais chairman who has been planning to accelerate succession to his son.
A successful sale, on the other hand, would have helped Hyundai raise about $1.3 billion, which would have been used to cover inheritance taxes.
Hyundai Motor Co. closed 1.13% higher at KRW179 500 per share in Seoul on Monday, while shares of Hyundai Glovis Co.fell by the 15% daily limit.
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