Korea Chooses Pan Ocean’s Parent Company as Buyer for HMM
Korea’s state-owned financial institutions have progressed in the ongoing process to privatize HMM (Hyundai Merchant Marine) by revealing that they have chosen the bid from the parent company of Pan Ocean, the Harim Group, as the preferred bidder to acquire control of HMM. The conclusive bidding round occurred in November, featuring a direct competition between two Korean corporations.
“Korea Ocean Business Corporation and Korea Development Bank selected Pan Ocean and JKL consortium as the preferred negotiating party for the sale of HMM management rights,” In a brief statement, Korea’s state-owned financial institutions announced the selection of the bid from the Harim Group, the parent company of Pan Ocean, as the preferred bidder for acquiring control of HMM (Hyundai Merchant Marine).
The bid is reported to be valued at $4.92 billion, covering nearly 58 percent of HMM’s outstanding stock or approximately 400 million shares, implying a total valuation for HMM of nearly $8.5 billion.
Following this decision, the institutions plan to enter final negotiations to finalize the contract terms. The state-owned entities anticipate completing the transaction in the first half of 2024. This marks a significant step in the decade-long effort by the government to stabilize and reorganize Hyundai Merchant Marine, with the Korean Development Bank (KDB) playing a crucial role in the process.
The government’s aim was to keep ownership and control of HMM in Korea, and the Harim Group, along with its partner private equity firm JKL, emerged as the preferred choice. Harim Group, known for its operations in the food processing and poultry industry, has committed to making Korea a shipping powerhouse. The partnership with JKL will aid in financing the transaction.
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However, media reports have raised potential concerns about regulatory reviews by antitrust authorities and the financial leverage required by Harim Group to fund the acquisition. Additionally, there were initial concerns about the state’s remaining share in HMM, but it appears that the stipulation regarding the conversion of remaining bonds has been withdrawn, allowing Harim Group to move forward with the bid.
As part of its diversification strategy, HMM recently ordered new containerships, pure car and truck carriers (PCTCs), multipurpose vessels (MPVs), and the world’s largest car carriers. The Harim Group is expected to conduct further due diligence on HMM, and there may be ongoing discussions as the deal progresses toward completion.
