Shareholders agitate for Hapag-Lloyd to take over HMM

Saturday, 13 January 2024

State creditors in South Korea have outlined how the sales process of HMM, the nation’s flagship carrier, will proceed with a group of minority shareholders making their preference clear for the only foreign bidder in the race, Germany’s Hapag-Lloyd.

Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) are selling their shares in HMM finally to privatise the company, having taken control of the carrier in 2016 when it ran into severe financial difficulties.

Four parties lodged bids by the August 21 deadline, with the KDB stating it will select second-round qualified bidders by the end of this month, after which due diligence will take place with a preferred bidder set to be announced by early November.

The sale is expected to earn the state creditors around $4.5bn. Splash understands the four bidders are Hapag-Lloyd, Harim Group, which controls Korean line Pan Ocean, as well as LX Holdings and Dongwon Group, Korean firms with interests in logistics.

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While much of the Korean maritime community has balked at the idea of a foreign firm taking over the country’s flagship, a group of minority shareholders are waging a campaign to get Hapag-Lloyd, a fellow member in THE Alliance, over the line.

“Selling HMM to Hapag-Lloyd could lead to an overseas leakage of Korea’s priceless national assets, such as maritime logistics know-how accumulated for decades and container transportation and terminal system management,” argued a statement issued by the Federation of Korea Maritime Industries and the Busan Port Development Council.

Previously when Korean shipping sales have been put up for sale, foreigners have not had any luck.

“This is, of course, a specific Korean issue in the case of HMM, but the national angle did gain significant traction during the pandemic disruptions and heightened the view amongst politicians, that perhaps it is not wise to leave critical infrastructure, such as container shipping, to foreign-owned entities,” analysts at Sea-Intelligence suggested in their latest weekly report, arguing that carrier acquisitions might become more embroiled in national politics than in the past.

Nevertheless, a group of minority shareholders have made the case that Hapag-Lloyd is the best bet.

“The minority shareholders’ alliance sees Hapag-Lloyd as the candidate that can enhance HMM’s corporate value, when considering its dividend payout ratios and business synergy effects,” Hong Yi-pyo, the head of the minority shareholders’ alliance, told local media this week.

Should Hapag-Lloyd be the winner of the bidding round, it will grow in size to almost match COSCO in terms of operated capacity, albeit still remaining the fifth-largest carrier.

Source : splash247.com