Hyundai’s Chung to Sell Glovis Stake on Legal Fight, Group Says
Hyundai Motor Co. (005380) Chairman Chung Mong Koo agreed to sell his $800 million stake in logistics affiliate Glovis Co. ending a three-year legal battle, according to a civic group that led lawsuits against him.
The automaker or its affiliates may buy Chung’s stake, Kang Jeong Min, a research associate at Solidarity for Economic Reform, said by phone from Seoul today. Hyundai Motor declined to comment in an e-mailed response to questions. Chung owned 18 percent of Glovis as of March 4, according to Bloomberg data.
Glovis tumbled the most since May in Seoul trading on concern that Hyundai, South Korea’s biggest carmaker, may pare its use of the transport company following the sale. Chung in February was ordered to pay compensation to Seoul-based Hyundai Motor after a court ruled that he had unfairly helped affiliates at the expense of the automaker.
“Investors seem to be worried that Chung’s exit may mean waning importance for Glovis in Hyundai Motor Group,” said Song Jun Duk, a Samsung Securities Co. analyst in Seoul. “But if the stake goes to Hyundai Motor, I can’t see it will make much difference.”
Chung, 73, agreed to sell the stake in a “reasonable” period, the civic group said in a statement on its website without elaboration. The billionaire owned 6.79 million shares as of March 4, according to data compiled by Bloomberg. The details of the sale haven’t yet been agreed upon, Kang said.
“Our goal was to improve corporate governance at Hyundai,” he said. “The releasing of control of Glovis and of future profits by Chairman Chung is certainly a penalty for him and we see it as having a meaningful impact.”
Glovis, based in Seoul, dropped 7 percent to 132,000 won at the 3 p.m. close of trading in the city. The benchmark Kospi index gained 0.5 percent. Hyundai advanced 4.4 percent.
The Seoul Central District Court ordered Chung on Feb. 25 to pay Hyundai Motor 74.6 billion won ($67 million) for favoring affiliates. The court dismissed a 1 trillion won claim from minority shareholders working with the civic group.
Chung transferred 819,241 Glovis shares to Hyundai following the February court ruling, the carmaker said in a regulatory filing on March 4. Chung’s holdings in Hyundai Motor and its affiliates are worth about $5.9 billion, including the Glovis stake, according to Bloomberg data.
To contact the reporter on this story: Seonjin Cha in Seoul at firstname.lastname@example.org