Greedy Hedge Fund

Elliott goes too far in pressuring Hyundai Motor to raise dividends

U.S activist hedge fund Elliott Management has set about to press Hyundai Motor for higher dividend payments.

The move is worrisome as it could erode the corporate value of the nation's largest automaker in the medium- to long-term

According to Hyundai Motor, Elliott has requested hefty dividends of 45 trillion won ($4 billion) based on common stock, ahead of the company's annual shareholders' meeting this month. The amount could go up to 58 trillion won when preferred shares are included, 35 times higher than the carmaker's net profit for last year

Hyundai Motor has made clear its opposition, rightly, saying Elliott's request could adversely affect its corporate and shareholder value by failing to take into account the current need for expanded investment.

Hyundai needs to secure more investments now more than ever before. The global auto industry is rapidly shifting to autonomous cars and environmentally friendly vehicles while the spread of ride-sharing services is sharply reducing the demand for vehicles.

All this explains why carmakers have to get over the impending crisis through pre-emptive investment.

The company also plans to invest more than 45 trillion won over the next five years.

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