On September 23, 2019, Hyundai Motor Group (“HMG”) signed an agreement for a USD 4 billion (KRW 4.4 trillion) joint venture (the “Transaction”) with Aptiv Technologies Limited (“Aptiv”), an automotive parts maker listed on the NYSE, to develop and commercialize the next-generation autonomous driving technologies.  In establishing this 50:50 joint venture, HMG will inject mostly cash while Aptiv will contribute its intellectual property (“IP”) and R&D resources.

Kim & Chang served as lead counsel, spearheading the negotiation of all key agreements and coordinating all relevant stakeholders and other advisors at all stages of the deal process.

While signing on schedule was particularly challenging given the complexity and diversity of the issues that this deal presented, we enabled it by (temporarily, towards the signing) dispatching and operating a large group of US-licensed attorneys in New York to resolve outstanding issues on-site/ on-demand, while simultaneously assisting with Korean law issues (e.g., public disclosures, board and shareholder’s meeting) through its Korean attorneys in Seoul.

The industry and the strategic path took by HMG in this deal was innovative.  This Transaction was the largest M&A ever carried out by HMG, which had historically focused on organic growth rather than growth by active M&As, initiated as an active measure to cope with fast-changing market landscape—i.e., all of the world’s leading OEM automakers are teaming up with autonomous driving technology companies in order to take the lead not only in the global automotive market but also in the next-generation related industries, including mobility.  Given that Aptiv has already secured very competitive autonomous driving technologies, the large-scale joint venture with Aptiv is expected to greatly contribute to HMG’s continued innovation and growth.

As counsel to HMG, Kim & Chang had to document and negotiate numerous complex issues, which stemmed from not only the nature of the technologies and markets involved (i.e., cutting-edge technologies in nascent markets) but also the two very different cultures at HMG and Aptiv (i.e., traditional Korean business group culture and US start-up culture).  In particular, we contributed to establishing a foundation for a successful operation of this joint venture by constructing a corporate governance that appropriately suits strategical needs of both parties, ensuring sufficiency of the key assets being contributed (i.e., notably IP and R&D resources) and encouraging and nourishing US start-ups’ culture of innovation supported by proven operational and manufacturing capabilities of one of the top OEM automakers, in each case through appropriate contractual arrangements.

While this Transaction is one of the largest mega deals in recent years, the price for this Transaction is actually recognized as reasonable relative to the other deals in the autonomous driving market. Given that the global autonomous driving market has acknowledged Aptiv’s technologies as one of the most advanced, we believe that HMG has secured a strong growth potential at a reasonable price through this Transaction.