￦500B deal lifts Hyundai Motor

The stock price of Hyundai Motor rose after months of continuous falls after the company’s vice chairman Chung Eui-sun bought about 500 billion won ($418.5 million) worth of shares of his own company from Hyundai Heavy Industries on Thursday.

According to data from the Financial Supervisory Service, Chung bought about 3.16 million shares of Hyundai Motors from Hyundai Heavy, which used to hold 4.4 million shares.

With the acquisition on Thursday, Chung holds 1.44 percent of Hyundai Motor, or 317.1 million shares, boosting his stake in the company’s ownership. Before the acquisition, Chung owned only 6,446 shares.

The move lifted the stock prices of Hyundai Motor 2.53 percent to close at 162,000 won on Friday.

Local stock analysts are debating whether the acquisition indicates Chung is trying to grab more power in the company’s management structure.

Some say Chung’s purchase is connected to the company’s cross-shareholding ban, which prohibits Hyundai Motor’s affiliates like Hyundai Mobis and Hyundai Glovis from acquiring the flagship automaker’s stocks.

“Thursday’s acquisition seems to have happened to hold Hyundai Mobis or Motor’s stock prices, which may have declined even further if either of them acquired Hyundai Heavy’s Hyundai Motor shares,” Kim Joon-seong, an analyst at Meritz Securities, wrote in a report on Friday. “So, basically, it was to help Hyundai Heavy to expand its cash reserves.”

The deal is reported to have been reached after Hyundai Heavy, which saw an operating loss of nearly 171 billion won in the second quarter of this year, tried to sell its shares to enhance its fiscal soundness.

Chung decided to directly acquire his own company’s shares to prevent the company’s stock price from slipping even lower, Hyundai Motor explained.

Other analysts say this is an attempt by Hyundai Motor to shift its management structure, saying that this is the beginning of moves by Chung Eui-sun to get the group’s management rights.

IBK Investment & Securities called Thursday’s move the “lead of meaningful changes in the company’s management structure.”

Lee Sang-hyun, an analyst at IBK Investment & Securities, said, “Chung’s Hyundai Motor stock acquisition followed just a day after Hyundai Mobis announced it will buy its own treasury stocks, which the market may regard as a move to begin cleaning up the group’s cross-shareholding web and begin the succession process.”

Chung is reported to have purchased the stocks with a portion of 1 trillion won he gained after selling his Hyundai Glovis and Innocean shares in February this year. Many had assumed that Chung would buy Hyundai Mobis, which is at the top of the group’s management structure.

Hyundai Motor Group has its autoparts arm at the top of the shareholding structure, the largest shareholder of Hyundai Motor, which is again the largest shareholder of Kia Motors. Kia holds the largest portion of Hyundai Mobis.

Hyundai Mobis stocks rose by 3.49 percent to end at 222,500 won on Friday. Samsung Securities forecast the Mobis’ price may decline again as Chung’s decision may be a signal he is trying to minimize the role of Mobis while boosting the role of Hyundai Motor by buying Hyundai Motor stocks.

Meanwhile, Hyundai Glovis, of which Chung owns nearly 23 percent of total shares, jumped by 7.33 percent to post 219,500 won, in expectations that Glovis’ position in the Hyundai Motor Group may be improved.

BY KIM JI-YOON [kim.jiyoon@joongang.co.kr]