Rates Surge And Alliance Shake-up Heighten Opposition To HMM Sale

• The planned sale of HMM to Harim Group encounters resistance, with unions citing concerns over synergy and financial transparency.
• The Red Sea crisis and Hapag-Lloyd’s exit from THE Alliance contribute to doubts about the deal’s viability.
• Harim’s financing plan lacks clarity, and the delay in negotiations raises questions about the proposed $4.9 billion acquisition.

The ongoing Red Sea crisis and the impending departure of Hapag-Lloyd from THE Alliance are strengthening objections to the planned sale of South Korean shipping company HMM to Harim Group, a South Korean poultry processor. Last month, the Korea Development Bank (KDB) and Korea Ocean Business Corp (KOBC), HMM’s major shareholders, selected a consortium led by Harim and PE firm JKL Partners as the preferred bidder for the carrier. However, concerns are growing that the current crisis and alliance changes could impact the synergies between HMM and Harim’s dry bulk-focused operations.

Red Sea Crisis and Potential Synergy Issues

Over the past two weeks, unions representing HMM’s office and seafaring employees engaged with stakeholders in South Korea’s maritime industry. They argue that the Red Sea crisis could lead to another windfall for container carriers, potentially affecting the synergies between HMM and Harim, particularly in the dry bulk sector. Jeon Jung-geun, chairman of HMM seafarers’ union, expressed concerns about potential overlaps in fleet expansion plans, stating, “HMM plans to expand its bulk carrier fleet to 55 vessels [from 29] by 2026, so if Harim becomes HMM’s next owner, there’ll be an overlap with Pan Ocean’s fleet.” Harim had previously acquired Pan Ocean, South Korea’s largest dry bulk shipping company, in 2015.

Concerns Over Harim’s Assets and Financing

The unions raised concerns about Harim’s fewer assets compared to HMM and questioned the transparency of Harim’s financing plan. Harim’s chairman, Kim Hong-kuk, claimed they had raised sufficient funds for the $4.9 billion acquisition with JKL, but the unions seek more clarity. Negotiations between KDB, KOBC, and Harim, initially scheduled for an earlier date, have been postponed to February 6 due to disagreements over delaying the exchange of convertible bonds.

Impact of Hapag-Lloyd’s Departure

The imminent departure of Hapag-Lloyd from THE Alliance in January 2025 has further complicated the situation. Koo Kyo-hoon, a logistics professor at Baewha Women’s University, anticipates that shippers may perceive today’s HMM differently from the future HMM, potentially leading to a reduction in the market share of South Korea’s national shipping companies.

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Source: The Loadstar

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