Report: Dongwon and Harim dueling for dominance in HMM bidding race

In the ongoing contest for control of South Korean shipping line HMM, Dongwon Group and Harim Group have emerged as the primary contenders, narrowing down the field in this maritime competition.

Previous reports indicated that four companies from South Korea were in the bidding race including, SM Group, LX Holdings, Dongwon Group, and Harim. German shipping major Hapag-Lloyd was also interested in becoming a bidder but failed to get shortlisted as state-backed stakeholders in HMM preferred having a South Korean bidder take over the shipping company.

According to Business Korea, bondholders like Korea Development Bank, Korea Ocean Business Corporation, and selling agent Samsung Securities reported that Dongwon Group and Harim Group-JKL Partners Consortium participated in the primary bidding for HMM, with LX International withdrawing from the competition.

The creditors reportedly aim to designate a preferred bidder by the end of the month, with market speculation indicating that a stock purchase agreement could be reached in the coming weeks.

However, significant challenges loom, primarily due to the substantial acquisition cost. Calculating the estimated worth of the divested stake based on HMM’s current market value, the anticipated selling price ranges between 5-7 trillion KRW ($3.8-5.3 billion).

HMM was bailed out by the Korean government in 2016 due to a prolonged downturn in the container market. Since then, the two banks collectively hold around 40 percent of HMM’s outstanding shares. Having undergone recapitalization and fleet modernization efforts, Hyundai Merchant Marine was rebranded as HMM and resumed operations in 2021.

The company has since invested heavily in fleet rejuvenation and decarbonization including investment in nine 9,000 TEU methanol-fueled containerships.

The order is part of the shipping major’s future growth strategy, which has earmarked $11.3 billion for future investments. These include the expansion of eco-friendly ships from the current 820,000 TEU to 1.2 million TEU by 2026.

Most recently, HMM has been investing in fleet diversification as it works to counter the effects of volatility in the container shipping sector.

In early November, the South Korean major revealed time charter contracts for four bulk carrier newbuildings. The charter deal is worth around $954.2 million with an undisclosed company and is set to last from 2026 to 2042.

HMM wants to grow its dry bulk fleet from 29, as recorded at the end of 2022, to a total of 55 by 2026. To achieve this, the company has already incorporated six new bulk carriers into its fleet in the current year. The plan is to continue this growth trajectory by introducing an additional 11 bulk carriers in the upcoming year.