Renewed Speculation of Potential Bidders to Acquire HMM
Korean media reports suggest that there continues to be exploration over the possible privatization of container carrier HMM, nearly two years after a prior attempt collapsed. According to Korea’s Maeil Business Newspaper group, the food and logistics giant Dongwon Group has decided to renew its exploration to formulate an offer for the company.
Next year will mark a decade since the government stepped in to rescue Hyundai Merchant Marine. It took majority ownership through the Korea Development Bank and Korea Ocean Business Corporation. With the company having returned to profitability and begun a new expansion program, bank officials have repeatedly discussed the belief that the government’s investments could be better spent on other projects.
The banks finally launched a bidding process in 2022, and Dongwong was one of the companies that entered the fray. The Government said that it wanted ownership control of HMM to remain with a Korean company, excluding Hapag-Lloyd, which expressed interest.
According to the media reports, Dongwong was second in the competition, offering approximately $4.2 billion, but $100 million behind a group made up of Harim and JKL Partners. After months of negotiations, the sale collapsed with reports that there was a deadlock over the management structure and role of the banks.
Dongwon, according to the reports, has decided to start a new exploratory group. The company wants to explore the acquisition to form an integrated logistics business. Dongwon got its start in the food business and also owns a small logistics company and operates a port terminal in Pusan.
The news report writes, “Dongwon Group is said to have internally advanced the formation of an organization to review related materials and discuss acquisition structure and financial simulations.”
A few months ago, it was widely reported that Korean steel company POSCO was also considering a bid to take ownership of HMM. The current news report notes that the company’s value has increased, meaning that a sale would likely be valued between $5.4 and $6.8 billion.
The banks have not commented on their plans after the failed 2023 negotiations. No timing has been set for resuming the sale process.
HMM continues to pursue its expansion and diversification efforts. The company recently placed large value orders for containerships after having passed the 1 million TEU threshold. It also ordered VLCCs and remains interested in the dry bulk sector. It failed in its own attempt at an acquisition and is now reported to be buying dry bulkers in the secondhand market.