South Korea’s SM Group has the financial firepower to buy huge domestic shipowner HMM, its chairman says.
But Woo Oh-hyun told the Korea Economic Daily that his conglomerate would not join the bidding for the ultra-large container ship, VLCC and bulker company if the price tag went above KRW 4.5trn ($3.55bn).
“[SM Group] will immediately jump into the race for HMM once its sale is officially announced,” Woo told the newspaper.
“Some compare us to a shrimp that dares to swallow a whale, but that is impossible. SM Group is already a whale that is strong enough and big enough to take over other whales.”
He said SM Group has raised about KRW 4.5trn in cash, loans and liquid assets from affiliates for a bid.
SM Group is the parent of HMM’s smaller boxship rival SM Line, and also controls Korea Shipping Corp, Korea Line Corp and TK Chemical Corp.
“We believe a reasonable price for HMM is about KRW 4trn. We can even offer up to KRW 4.5trn, but if the price goes above that level by even KRW 1, we will give it up,” the chairman said.
SM Group is already HMM’s third-largest investor, with a stake of 6.56%, behind state-run Korea Development Bank (20.98%) and ship finance house Korea Ocean Business Corp (19.96%).
Woo sees buying HMM as his “last mission” at the age of 72.
“We have amassed HMM shares in consideration of a possible takeover of HMM,” he added, saying that he wants to reinvigorate South Korean shipping by making his group Asia’s number one owner.
SM Line to be divested?
But if he is priced out, Woo could sell off SM Line, he admitted.
The container line was formed from the rubble of collapsed national carrier Hanjin Shipping in 2016.
“The shipping industry is very cyclical, and its boom cycle ended last year, we think. The new owner of HMM should be one that can stay long and firm. We will run HMM without debt if we have it,” Woo added.
Korea Development Bank fired the gun on the HMM privatisation in March.
The market cap has since risen to KRW 9.9trn.
The bank took over management rights following a liquidity crisis at Hyundai Group in 2016.
Local media has speculated that logistics companies LX Pantos, CJ Logistics and Samsung SDS, and shipowner Hyundai Glovis could also bid.
