A consortium led by Harim Group — the parent of bulker operator Pan Ocean — has emerged as the preferred bidder for South Korean shipping company HMM.
Harim and its private equity partner JKL Partners have seen off a rival bid by logistics company Dongwon Group with an offer worth KRW 6.4trn ($4.92bn), according to South Korean media.
The decision was announced today by HMM’s big state-run shareholders, the Korean Development Bank and the Korean Ocean Business Corp.
The two state-owned companies are disposing of their 57.9% stake in the Seoul-based container, VLCC and bulker company.
If approved by regulators, the deal will be finalised in the first half of next year.
That will pave the way for the creation of a South Korean shipping giant.
Clarksons’ Shipping Intelligence Network says HMM has 66 owned ships, including container ships, VLCCs and bulkers, and 35 newbuildings on order. VesselsValue puts an estimated $9.38bn valuation on the fleet, though it counts only 57 ships on the water and 34 newbuildings.
Pan Ocean, also of South Korea, has 113 owned ships on the water and 10 newbuildings. VesselsValue estimates the fleet at $5.15bn, but that is only based on 110 ships and nine newbuildings.
It is expected that Pan Ocean will be used as the vehicle to acquire HMM, which is the world’s eighth-largest liner operator.
“We will make Korea one of the world’s top five shipping powers,” Harim chairman Kim Hong-guk told the Korean Economic Daily.
Right price?
Food processing and distribution company Harim moved into shipping with the acquisition of Pan Ocean in 2015.
The company is acquiring HMM at a difficult juncture for the container market when markets are heading south.
HMM’s net profit sank by 96% to KRW 95bn ($72m) in the third quarter of this year, down from KRW 2.6trn ($1.9bn) in the same quarter last year.
The acquisition will be financed by selling KRW 500bn of perpetual bonds and seeking financial support from construction conglomerate Hoban Group. Harim is also likely to liquidate some of Pan Ocean’s vessels while planning a rights offering, according to the news reports.
The deal brings to an end the long-running privatisation of HMM that drew interest from several players.
German container ship operator Hapag-Lloyd, which is a partner with HMM in THE Alliance, was said to be in the running at one point.
SM Group — the parent company of SM Line — Korea Shipping Corp, Korea Line Corp and TK Chemical Corp had also been expected to bid.
