Hapag-Lloyd is reportedly among four bidders to have submitted offers for South Korea’s largest liner company HMM.
Local news agencies report that the German owner and three local companies — LX Group, Harim Holdings and Dongwon Holdings Group — have participated in the preliminary bidding for HMM’s shares owned by Korea Development Bank (KDB) and Korea Ocean Business Corp.
The two state-owned companies are looking to sell their combined 399m HMM shares including shares converted from perpetual convertible bonds and bonds with warrants worth around KRW 5trn ($3.9bn).
The local shipping industry was surprised that SM Group, the parent company of SM Line, Korea Shipping Corp, Korea Line Corp and TK Chemical Corp did not join the bid.
Last month, SM Group chairman Woo Oh-hyun told the Korea Economic Daily that his conglomerate would “immediately jump into the race for HMM once its sale is officially announced”.
However, he would not join the bidding for the ultra-large container ship, VLCC and bulker company if the price tag went above KRW 4.5trn.
In the preliminary round, KDB will assess the eligibility of the bidders by evaluating their ability to operate a national shipping line and to mobilise funds.
KDB will then conduct due diligence for about two months before selecting the preferred bidder and closing the sale by the end of this year.
Harim was mentioned to be partnering with private equity fund manager JKL to form a consortium, while Dongwon is teaming up with Korea Investment Holdings.
LX Group, which was reported to have KRW 2.4trn in cash and equivalents, is looking at various options including collaborating with financial investors to finance the purchase.
Analysts think the sale of HMM to Hapag-Lloyd could prove to be difficult as the predominantly container shipping company is South Korea’s national carrier. HMM also has a presence in the tanker, dry bulk and multipurpose segment.
“After the Covid lockdown, several countries including South Korea recognised that each country needs to have its own national fleet to transport their goods for security reasons,” a shipping source in Seoul said.
The opposition to the sale of HMM to a non-South Korean was displayed when multiple foreign companies competed in a preliminary bid for Hyundai LNG a few months ago.
Authorities from South Korea’s shipping sector and the government opposed the sale to a non-South Korean buyer.
