HMM Sale To Hit A Snag Amid Shipping Slowdowns

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Credits: Loadstar

The sale of South Korea’s No. 1 container shipper HMM, which is anticipated to be one of the country’s largest mergers and acquisitions for the second half of 2023, could hit a snag amid a slowdown in the shipping industry, reports the Korea Herald.

In November, state-owned Korea Development Bank, the largest shareholder of HMM, is reportedly scheduled to select its preferred bidder for the acquisition.

HMM sale to face hurdles

Earlier this month, acquisition candidates for HMM were narrowed down to a three-way race between South Korean fisheries firm Dongwon Industries, food giant Harim and LX Group.

The acquisition deal will involve the HMM stake held by Korea Development Bank (KDB) and Korea Ocean Business Corp – 20.69% and 19.96%, respectively, selling a total of 199 million shares via the process. Also, 200 million shares of HMM are scheduled to be additionally converted from perpetual bonds to be sold during the process.

Regarding the takeover deal, industry watchers say tumbling demand for maritime transport could weaken potential buyers’ appetite.

Amid the global recession in the maritime transport industry, HMM’s performance has been dwindling. With the acquisition of all of KDB’s shares and Korea Maritime Development Corp’s share in HMM expected to cost at least five trillion won, acquiring the company could work as a winner’s curse at this timing,” said a shipping industry official on the condition of anonymity.

As of Sept 29, the Shanghai Containerised Freight Index, which calculates the fares of 15 of the most frequently used sea routes around the world and functions as a metric for demand in the maritime transport, shrank to 886.85, logging a 53% year-on-year decrease.

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Source: The Korea Herald