The Hyundai Motor Group is facing a deadline of two months before exercising its put option (purchase claim) with Japan's SoftBank, the major shareholder when it acquired the robot manufacturer Boston Dynamics in 2021. The Hyundai Motor Group plans to list Boston Dynamics on the New York Stock Exchange, but due to worsening performance, it has become difficult to conduct an initial public offering (IPO) in the first half of this year, putting the group in a position to bear the remaining equity of SoftBank.
Boston Dynamics is a company in which Chung Eui-sun, chairman of Hyundai Motor Group, holds a personal equity of 21.9%. The financial market analyzes that after the company's listing, if the stock price rises, Chairman Chung is expected to sell his equity to fund succession efforts, such as resolving the circular investment structure of Hyundai Motor Group. Delays in listing will likely prolong Chairman Chung's succession efforts.
According to the complete automobile and investment banking (IB) industries on the 6th, the Hyundai Motor Group is reviewing various options to acquire the remaining equity of Boston Dynamics held by SoftBank ahead of the planned exercise date for the put option in June.
Boston Dynamics, established in the United States in 1992, was acquired by Google in 2013 and SoftBank in 2017, and in 2021, Hyundai Motor Group acquired 80% of its equity for approximately 1 trillion won, integrating it as a subsidiary. At that time, Hyundai held 30%, Hyundai Mobis held 20%, Chairman Chung held 20%, and Hyundai GLOVIS held 10% of the equity.
When Hyundai Motor Group signed a contract to acquire 80% of Boston Dynamics from SoftBank, it included a clause stipulating that if it cannot list on the New York Stock Exchange by June of this year, it would acquire the remaining 20% of SoftBank's equity.
Boston Dynamics has since seen its performance deteriorate, and its corporate value has not risen as rapidly as expected. Revenue increased from 78.2 billion won in 2022 to 91 billion won in 2023, but during the same period, net losses rose from 255.1 billion won to 334.8 billion won. By the end of the third quarter of last year, the net loss amounted to 315.6 billion won.
The listing on the New York Stock Exchange has also been delayed. In order to secure investment funds, the Hyundai Motor Group has conducted a paid-in capital increase four times since 2022. As a result, Chairman Chung's equity percentage has increased to 21.9%, while SoftBank's equity has decreased to 12.4%.
According to the business report of Hyundai GLOVIS at the end of last year, the acquisition cost of its 10.95% stake in Boston Dynamics was stated as 26.47 billion won. Based on this standard, the corporate value of Boston Dynamics at the end of last year was around 2.4 trillion won. Although this represents more than a 1 trillion won increase in valuation compared to the amount Hyundai Motor Group spent during the acquisition, it is still insufficient for the funds needed for Chairman Chung's succession.
Chairman Chung controls the group through a circular investment structure linking Hyundai Mobis, Hyundai Motor, Kia, and Hyundai Mobis again. To resolve this, he needs to acquire more shares of Hyundai Mobis, where his current equity ownership is only 0.33%.
The financial market analyzes that in order for Chairman Chung to secure sufficient equity in Hyundai Mobis and resolve the circular investment structure, over 6 trillion won in funding is needed. Considering that Chairman Chung's stake in Boston Dynamics is 21.9%, it is believed that Boston Dynamics' corporate value must reach at least 30 trillion won.
A senior official at an asset management company noted, "If Hyundai Motor Group acquires SoftBank's remaining equity, the IPO deadline will be lifted, signaling that Chairman Chung's succession efforts will be delayed more than anticipated," and added that "this could also affect the stock prices of key affiliates such as Hyundai Mobis and Hyundai GLOVIS that are central to the succession.
SoftBank may choose to continue holding its equity in Boston Dynamics without exercising the put option. However, the financial market believes it is highly likely that SoftBank will sell all its equity to Hyundai Motor Group.
When the acquisition agreement for Boston Dynamics was signed four years ago, SoftBank wanted to sell all its equity, but Hyundai Motor Group, which was short on funds and wanted to reduce risks, proposed the put option. Given that Boston Dynamics’ performance has worsened since then, the financial market argues that there is no reason for SoftBank to continue holding equity due to the uncertain IPO.
An official from an asset management company stated, "At that time, both parties likely applied an internal rate of return (IRR) higher than the market interest rates when they entered the put option contract," adding, "The remaining equity's yield over the four years is estimated to be about 30%, so it is unlikely that SoftBank would wait for an IPO and give that up."
Hyundai Motor Group has repeatedly stated its intent to deploy the humanoid robot "All-New Atlas," created by Boston Dynamics in April last year, at the production sites of Hyundai and Kia. In March of this year, the robot gained attention by publicly releasing a video of itself learning and working.
The financial market suggests that for Boston Dynamics to enter the New York Stock Exchange and see its stock price rise, it must prove a higher technological advantage over its competitors. According to Morgan Stanley, over 100 public companies worldwide are developing humanoid robots, more than half of which are Chinese companies. Tesla is also working on commercializing its humanoid robot Optimus, while OpenAI, the developer of the generative AI ChatGPT, has recently entered the humanoid development field.