SEOUL -- A Hyundai Motor autoparts unit has withdrawn a restructuring plan that would give it effective control of the South Korean conglomerate, the supplier said Monday, after a small group of international investors criticized the terms as skewed toward the founding family.
But Hyundai Mobis canceled the May 29 meeting, saying that executing the plan would be difficult without sufficient trust and support from shareholders. A showdown was looming with a group of investors including U.S. activist fund Elliott Management, led by prominent American investor Paul Singer.
The group said the move was meant to streamline the tangled circular shareholdings within South Korea's second-largest chaebol, or family-owned conglomerate, and improve competitiveness. The group also includes Kia Motors.
The plan drew support from South Korea's Fair Trade Commission, which is pressing these conglomerates to change their opaque, insular ways amid rising political pressure on big business.
But Elliott said the proposed transaction had no clear logic or benefits for minority shareholders. The U.S. fund had proposed its own overhaul of the Hyundai group.
"The unwinding of the current circular shareholding by itself is not enough for the group to declare the restructuring a corporate governance improvement, especially if the transaction is not supported by sound business rationale," Elliott said in a statement last month, when the fund disclosed a more than $1 billion investment in the group.