Hyundai Motor executives fail to sell $1.25 billion shares in logistics affiliate
Hyundai Motor Company has said its chairman and his son failed to sell about $1.25 billion (£830 million) worth of shares in logistics affiliate Hyundai Glovis, thwarting a succession move at South Korea's second-biggest family-owned conglomerate.
The size of the sale spooked investors at a time of heightened market resistance to the tendency of South Korea's family-owned business empires, known as chaebols, to put the interests of kin ahead of ordinary shareholders, analysts said.
Kim Sung-soo, a Fund Manager at LS Asset Management which holds shares in Hyundai Glovis, said: "The block sale announcement was sudden and unexpected. The market will welcome deals only if they go as expected and in a rational manner."
Hyundai Motor Chairman Chung Mong-koo and Vice Chairman Chung Eui-sun on Monday offered 5.02 million shares at 264,000 won to 277,500 won ($244 to $256) each, a discount of up to 12 percent to the last closing price of Hyundai Glovis, bringing their total stake to below 30 percent.
The sale would have helped Eui-sun, the only son of Mong-koo, buy stakes in key units such as Hyundai Mobis while having freed Hyundai Glovis from antitrust scrutiny over inter-affiliate transactions, analysts said.
The sale collapsed due to its large size and as "some conditions were not met," Hyundai Motor said in a statement, adding that it had no plan to resume the block deal for now.
Hyundai Glovis shares, which have risen strongly for the past year, plunged by the daily limit of 15 percent after the announcement, as investors concluded the logistics unit may no longer be important to the chaebol's succession process.
Although Mong-koo, 76, has given no signal that he plans to step down soon as head of Hyundai Motor Group, he is expected to eventually hand over the reins to Eui-sun, 44, his only son.
The junior Chung lacks stakes in key units like Hyundai Mobis, Hyundai Motor Co and Kia Motors which he needs to gain control of South Korea's biggest conglomerate after Samsung. Hyundai Mobis shares surged by as much as 13 percent on Tuesday on expectations that the junior Chung may try to buy shares in the auto parts affiliate.
Shareholders traditionally held little sway over the chaebols that form the backbone of Asia's fourth-largest economy.
But with Hyundai and Samsung both seen preparing to hand over management control to new generations, investors are seizing the moment to stiffen their resistance to decisions made with little consultation and without sufficient regard to their interests.
Investor anger at a $10 billion property purchase by a consortium led by Hyundai Motor at three times the appraised value triggered a rare share buyback by the automaker and its affiliate Kia Motors last year.
Cainiao Network Launches Customer-Centric Logistics
As the logistics division of the Alibaba Group, Cainiao Smart Logistics Network has decided to provide its Southeast Asian customers with unsurpassed service during its annual shopping festival. Based on customer feedback surveys, the company will expand its real-time customer service support and speed up delivery times. ‘By expanding and deepening our services, we aim to provide a stronger logistics infrastructure that can bolster the booming eCommerce sector, support merchants’ expansion into new markets and diversify retail options for consumers’, said Chris Fan, Head of Cross-Border, Singapore, Cainiao Network.
Who Is Cainiao?
According to TIME Magazine, Cainiao ‘is far from a typical logistics firm’. The company controls an open platform that allows it to collaborate with 3,000 logistics partners and 3 million couriers. This means that merchants can choose the least expensive and most efficient shipping options, based on Cainiao’s real-time logistics analytics. The company’s goal is to ship packages anywhere in the world in under 72 hours—and for less than US$3.00.
For countless small business owners around the world, from coffee-growers to textile-weavers, this could change everything. Usually, it costs about US$100 to ship a DHL envelope from Shanghai to London in five days. Cainiao aims to change that. Said its CEO Wan Lin: ‘The biggest barrier to globalisation is logistics’.
What’s Part of the Upgrade?
Throughout the Tmall festival, Cainiao’s logistics upgrade will be divided into four critical segments:
- Real-time customer service support. Cainiao has launched a direct WhatsApp channel for customers to receive logistics updates and ask questions.
- Expansion of air freight parcel size and weight limits. Packages can now be up to 30 kilograms or 1-metre x 1.6 meters to help ship large items such as furniture.
- Daily air and sea freight connections. Shipping frequency will almost double to seven times weekly to maintain resilience and efficiency.
- Compensation for lost or damaged packages. Customers will be reimbursed up to RMB 2,000 (US$311).
Where is the Company Headed?
From June 1st to June 20th, the finale of Tmall, Cainiao will ensure that its customers feel confident in the company’s ability to deliver their packages. Despite global shipping delays due to COVID, the show will go on. Said Fan: ‘This series of customer-centric logistics upgrades reaffirms our goal of pursuing value-added services to enhance customers’ shopping experience while mitigating challenges posed by external factors’.
Furthermore, Cainiao has recently expanded its Southeast Asian operations, achieving revenue growth of 68% year-over-year. In Malaysia, the logistics operation has partnered with BEST Inc. and Yunda; in Singapore, the company has partnered with Roadbull, Park & Parcel, and the Singapore Post. And if its recent measures help retain and grow its customer base, the company will be well-poised to lead the industry in resilient and customer-centric global logistics. ‘COVID-19 made everyone realise how important the logistics infrastructure backbone is’, said Wan. ‘And it gave us a peek at what Cainiao should look like in three years’.