- POSCO is preparing to acquire a controlling stake in HMM, valued at around $5 billion, marking its re-entry into the shipping industry.
- The group views HMM as a new growth engine to offset slowdowns in its steel and battery material businesses.
- Acquisition plans may involve joint management with KOBC, while a competitive bidding process is expected due to regulatory rules.
- HMM faces challenges from volatile shipping rates, including impacts from US tariff hikes, but POSCO’s strong financial position supports the potential deal.
POSCO Group, South Korea’s largest trader of steel and energy raw materials, is preparing to enter the shipping sector by pursuing a controlling stake in HMM Co., the nation’s leading ocean carrier. The move, valued at nearly 7 trillion won ($5 billion), is aimed at strengthening its logistics capabilities and securing long-term growth opportunities, according to KED Global.
POSCO’s Potential Partnership with KOBC
The Korea Development Bank (KDB) and Korea Ocean Business Corporation (KOBC) have been seeking to divest their holdings in HMM to recover taxpayer funds invested during the company’s 2016 rescue, when it was bailed out from near bankruptcy amid a global shipping downturn. Earlier efforts to sell the carrier fell through in early 2024 after Harim Co., the country’s largest poultry processor and the preferred bidder, withdrew from a $5 billion agreement to acquire a 57.9% stake in partnership with JKL Partners. The deal collapsed largely because of conditions requiring the sellers to retain influence over HMM’s management, a clause that Harim opposed.
POSCO is now considering a different approach by exploring joint management of HMM with KOBC, which currently holds a 35.67% stake. Sources note that KOBC is not looking to sell its shares in the near future, and given the scale of investment already required, POSCO has no immediate plans to purchase KOBC’s stake.
POSCO Eyes HMM as a New Growth Engine
POSCO has long been considered a leading candidate whenever HMM was put up for sale, though it initially denied interest due to limited business synergy. Industry observers now note that the steel and trading giant sees HMM as a potential growth engine to counter slowing performance in its core steel and secondary battery materials businesses. As a major trading firm, POSCO handles imports of bituminous coal, steel materials, and battery components, with logistics costs totaling roughly 3 trillion won annually. With 7 trillion won in cash and cash equivalents as of June, the group is believed to have sufficient resources to acquire KDB’s stake in the container carrier.
A successful acquisition would mark POSCO’s return to the shipping industry since it sold its shipping arm to Hanjin Shipping Co. in 1995, creating a mega-sized operator capable of competing with global players such as Maersk and MSC. The move comes amid challenges in the sector, as HMM reported a 63.8% drop in second-quarter operating profit, largely due to declining shipping rates following US tariff increases, which have heightened volatility across the logistics industry.
Although KDB aims to restart the sale of HMM later this year, the process may face delays with the CEO position still vacant. POSCO could face competition from HD Hyundai Heavy Group, Hanjin Group, and possibly Harim Group in a competitive bidding process, as HMM cannot be sold through a proprietary transaction under current regulations.
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Source: KED Global
