Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Four groups show interest in acquiring HMM
An HMM container ship / Courtesy of HMM
By Lee Yeon-woo
By Lee Yeon-woo
Competition is heating up to acquire HMM, the largest shipping company in Korea, with four mid-sized conglomerates already expressing interest.
According to investment banking (IB) sources, Wednesday, SM Group, LX Group, Harim, and Dongwon Group have reportedly received information memoranda, which provide investors with essential information about HMM, and started to review their potential acquisition.
Samsung Securities, which is supervising the sale, will conduct a preliminary bid until Aug. 21. The IB industry anticipates the possibility of various corporations participating in the bid, including even the top 10 major conglomerates.
The sale target includes the entire stake in HMM held by Korea Development Bank (KDB), which stands at 20.69 percent, and the Korea Ocean Business Corporation (KOBC), which is 19.96 percent. The stakes up for sale are equivalent to 399 million shares, estimated to be worth up to 5 trillion won ($3.9 billion).
As the acquisition entails trillions of won, observers are closely watching the firms' ability to mobilize cash.
SM Group, which was the first in the industry to announce its participation in the bid, has already expressed confidence in raising 4.5 trillion won. The group owns several shipping-related affiliates, including SM Korea Line and SM Korea Shipping.
Harim, the country's leading poultry firm, is reportedly in discussions to form a consortium with local private equity firm, JKL Partners. In 2015, the joint consortium of two firms acquired the bulk carrier Pan Ocean.
Since both SM Group and Harim have already ventured into the shipping industry, acquiring HMM presents an opportunity to expand their businesses and establish a significant presence in the market.
The other contenders, LX and Dongwon Group, are expected to procure funds from financial investors. LX foresees synergy with its key affiliate LX Pantos, a global total logistics company. Dongwon Group can also complete a comprehensive distribution chain by acquiring HMM, given it already owns affiliates in the land logistics and port terminal industries.
As of Wednesday, only SM Group has publicly declared its intention to acquire HMM.
KDB and KOBC stated, “Considering the significant role HMM plays in the national economy, we are planning to transfer management rights to a buyer capable of fostering HMM's sustainable growth.”