Acquisition would make privatisation of HMM more challenging

HMM has announced plans to expand its bulk carrier fleet significantly by 2030. This ambitious expansion is part of HMM’s “Mid-to-Long-Term Strategy 2030,” unveiled last September, which aims to increase the fleet from 36 vessels, totaling 6.3 million DWT, to 110 vessels, reaching 12.56 million DWT. The company also targets a substantial increase in bulk carrier-related revenue, from 1.243 trillion won in 2023 to 3.32 trillion won by 2030, with the revenue proportion expected to grow from 15% to 22% over the next seven years.

On Feb. 26, industry sources revealed that HMM is considering acquiring a portion of SK Shipping’s business, having been selected as the preferred bidder for the partial sale. The company plans to complete due diligence by mid-next month and present the acquisition proposal to its board as early as April. This potential acquisition is seen as a strategic move to enhance HMM’s competitiveness as a global integrated shipping company by increasing vessel operation efficiency and establishing a large-scale network.

However, the acquisition has sparked concerns regarding HMM’s privatization process. The acquisition could potentially increase HMM’s valuation, making privatization more challenging. An industry insider commented, “The pursuit of acquiring SK Shipping could complicate the timing and conditions for privatization. Previously, the government prioritized the recovery of public funds and did not accommodate the management rights demands of potential acquirers like Harim.” In a previous attempt, Harim failed to finalize the acquisition of HMM due to insufficient funding, highlighting the complexities involved in the privatization process.

HMM’s largest shareholders, Korea Ocean Business Corp. and Korea Development Bank, holding approximately 48.5% and 20.7% respectively, may prioritize value maximization over immediate privatization. This approach could potentially slow down the privatization process, as these government-affiliated entities play a significant role in HMM’s strategic decisions.

The shipping industry, known for its cyclical nature, requires companies to strategically expand fleets and secure stable transport contracts to enhance competitiveness and revenue stability. HMM’s recent record-breaking performance underscores its potential for growth, but the acquisition of SK Shipping could further complicate its privatization prospects.

Source: Businesskorea