Hyundai Affiliates Together in the “Elevator”

“Sustain the legitimacy of the founding family of the Hyundai group.”

With all Hyundai affiliates responding to foreigners` stock accumulation of the Hyundai Elevator Co., opinions are emerging which suggest that the Hyundai family that had been estranged for a while is reuniting.

▽The meaning of Hyundai`s co-defense= 6 Hyundai affiliates, including KCC (former Korea Chemical Co.), Hyundai Department Store, Inc., Hyundai Cement Co. and Korea Flange, purchased Hyundai Elevator Co.’s stocks to defend managerial rights.

Chung Sang-young, honorary president of KCC is a younger brother of the late honorary chairman, Chung Ju-young. Hyundai Cement Co. is an affiliate of the former Sung-woo group`s honorary president Chung Soon-young, who is also the late Chung’s brother. Korea Flange is an affiliate of honorary president Kim Young-ju, whose wife is the late Chung’s sister. The president of Hyundai Department Store, Inc. is Chung Mong-kun, an older brother of the late Chung Mong-hun, chairman of the Hyundai Asan Group.

It is known that the co-defense strategy was lead by honorary president Chung Sang-young. Chung Sang-young is known to have shown special affection for late Chung Mong-hun, when he was alive, helping him pay back his personal debts. Consequently, there are expectations that Chung Sang-young will play an important role in reorganization the Hyundai group and in deciding the legitimate heir of the group.

A Hyundai official said, “With a threat on the Hyundai brand intensifying, it seems that the Hyundai affiliates came to a consensus that they cannot neglect the current situation.”

▽The agony of Chung Mong-ku, president of Hyundai and Kia Motors= Chung Mong-ku, the eldest of the Hyundai brothers, did not participate in purchasing the stock. Hyundai group is implicitly hoping for Chung Mong-ku to do away with the old scores and support the group. An official of Hyundai group said, “Although they did not ask Hyundai Motors for help, it seems that they would not have declined had Hyundai Motors offered to help.”

In response, a Hyundai Motor Company official commented, “It will never happen. The public would not allow it.” However, some analyses suggest that although Hyundai Motors will not provide direct assistance, it will probably regain closer ties with the affiliates of Chung Mong-hun, within the range of foreigners’ tolerance.

▽Market evaluation=Park Dong-myung of Good Morning Shinhan Securities Co. says, “Because purchasing Hyundai Elevators` stock is an investment rather than a grant, it will not be easy for the foreign shareholders to make an issue out of it,” and added, “The foreigners would probably not tolerate direct support for the North Korean business.”

Meaning, that support, should there be any, should not harm shareholders` rights and interests.

Jong sik Kong Suk-Ho Shin kong@donga.com kyle@donga.com