Harim emerges as HMM’s preferred bidder

A consortium led by Harim Group, the parent company of bulker operator Pan Ocean, has secured its position as the preferred bidder for the acquisition of South Korean shipping company HMM, Harim confirmed earlier today in a regulatory filing.

The consortium, comprising Harim and its private equity partner JKL Partners, successfully outbid logistics company Dongwon Group with a compelling offer of KRW 6.4 trillion ($4.92 billion), Reuters reports.

“The contract is scheduled to be signed after finalizing the stock sale agreement and the agreement between shareholders and bondholders through negotiations with the seller, which is Korea Development Bank & Korea Ocean Business Corporation,” Harim said.

The state-owned entities are divesting their combined 57.9% stake in HMM.

The announcement marks a significant step in the ongoing battle for control of the Seoul-based shipping major. HMM has a substantial fleet, comprising 66 owned ships, including container ships, VLCCs, and bulkers, with an additional 35 newbuildings on order. Pan Ocean, poised to serve as the vehicle for acquiring HMM, owns 113 ships on the water and 10 newbuildings, with a fleet valuation of $5.15 billion.

To finance the acquisition, Harim plans to issue KRW 500 billion in perpetual bonds and seek financial support from construction conglomerate Hoban Group. Additionally, the company is considering the liquidation of some of Pan Ocean’s vessels while contemplating a rights offering, according to local media reports.

The deal signifies the conclusion of the protracted privatization process for HMM, which drew interest from various players, including German container ship operator Hapag-Lloyd and SM Group, the parent company of SM Line, Korea Shipping Corp, Korea Line Corp, and TK Chemical Corp.

Pending regulatory approval, the acquisition deal is expected to be finalized in the first half of the upcoming year, laying the groundwork for the establishment of a formidable South Korean shipping giant.

In 2016, facing an extended downturn in the container market, Hyundai Merchant Marine (HMM) received a bailout from the Korean government. Subsequently, the two banks collectively acquired approximately 40 percent of HMM’s outstanding shares. Following extensive efforts in recapitalization and fleet modernization, HMM underwent a rebranding and resumed its operations in 2021.

Since its revival, the company has committed significant resources to fleet rejuvenation and decarbonization initiatives, exemplified by its investment in nine 9,000 TEU methanol-fueled containerships. This strategic move aligns with HMM’s broader commitment to sustainability and environmental responsibility.

The company has set an ambitious goal of expanding the fleet of eco-friendly ships from the current 820,000 TEU to 1.2 million TEU by the year 2026.