A planned overhaul of Hyundai Motor Group’s ownership structure has garnered more opposition with a major US proxy adviser urging shareholders to reject a deal in which the group’s proposed de facto holding firm would spin off lucrative businesses.

Glass Lewis joins US hedge fund Elliott as well as South Korean proxy adviser Sustinvest in coming out against the plans, which are widely viewed as aimed at laying the groundwork for a father-to-son succession at the group.

But it remains to be seen whether there is sufficient opposition to derail the deal at a May 29 vote. Two-thirds of votes cast by Hyundai Mobis shareholders need to be in favour of the deal for it to be successful.

On one hand, foreign shareholders own nearly half of Mobis, which is set to be the group’s de facto holding firm. But on the other, Hyundai Motor Group chairman Chung Mong-koo and the group’s affiliates own around 30 per cent.

Under the deal, Mobis would spin off module and after-service parts businesses which would then be merged with logistics firm Hyundai Glovis Co Ltd.

The group’s chairman and his son plan to sell their shares in Glovis to buy stakes in Mobis.

Glass Lewis and other opponents argue, however, that Mobis is selling the businesses too cheaply and that Mobis shareholders will be short-changed.

The proposed terms of the spin-off merger are “profoundly unattractive for Mobis shareholders, yet more than reasonable for existing Glovis shareholders,” Glass Lewis said, adding that the deal had “questionable business logic”.

Lee Jae-il, an analyst at Eugene Investment Securities, said the vote could depend on the position of the National Pension Service fund and that Elliott would have less clout than in other battles it has waged in South Korea as it is not that big a shareholder in Mobis.

“The NPS, which has a stake of almost 10 per cent, has the casting vote, and if it does not oppose the plan, there is a higher chance that the deal will get approval.”

The chief of South Korea’s antitrust agency, Kim Sang-jo, has said the plan was a “positive” step towards improving the group’s ownership structure. Last month, Elliott, which owns over 1.5 per cent of Mobis, proposed what it called a more efficient holding company structure, as well as better shareholder returns and more independent board members.

Hyundai Motor and Hyundai Mobis have since announced share buybacks and cancellations in the hope of bringing shareholders on side. But Elliott has called the measures token efforts that do not go far enough to address corporate governance issues.

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