Bidders receive IMs for $3.9B HMM stake sale

Multiple corporate groups from the shipping, trading and food industries have been picked as prospective investors for a $3.9-billion controlling stake in Korea's largest shipping company HMM, after receiving an Investment Memorandum.

HMM's Hamburg container ship [YONHAP]

Multiple corporate groups from the shipping, trading and food industries have been picked as prospective investors for a 5-trillion-won ($3.9 billion) controlling stake in Korea's largest shipping company HMM, after receiving an Investment Memorandum (IM).

The four groups SM Group, LX Holdings, Dongwon Group, and Harim received the IM from Samsung Securities, the advisor overseeing HMM's sale, according to local media reports. While the latter three declined to reveal their intentions, SM Group, a shipping firm with no relation to SM Entertainment, officially confirmed its participation in the bidding.

Samsung Securities will be accepting preliminary bidding proposals until Aug. 21, with the government aiming to select a preferred suitor within this year.

SM Group owns diverse shipping affiliates, including Korea Line, Korea Shipping, SM Line and Chang Myung Shipping. The group currently owns a slightly over 6 percent stake in HMM, making it the third-largest shareholder. Food business Harim is the parent company of Pan Ocean, the country's largest dry bulk shipping company. By acquiring HMM, these potential buyers can strengthen their presence in the container shipping sector.

LX Holdings has affiliates in diverse sectors such as trading, semiconductors and the manufacture of building materials. Through its logistics unit LX Pantos, the company envisions a seamless integration of maritime logistics with its existing land logistics and warehouse operations via the acquisition. Similarly, Dongwon Group could leverage synergies with HMM through its land logistics subsidiary, Dongwon Loex, and its port operation arm, Dongwon Pusan Container Terminal.

HMM's total assets amount to 25.8 trillion won, or 19th place in Korea's business rankings. The inclusion of HMM within their portfolio would also propel the quartet of bidders into the top 15 largest companies in the country.

HMM's two largest shareholders, state-run Korea Development Bank and the Korea Ocean Business Corporation, have put up 38.9 percent of, or 399 million shares in, HMM for sale. The deal is valued at around 5 trillion won, considering HMM's market capitalization, which stood at 8.45 trillion won as of Wednesday, along with the stake and the premium for management rights.

The government is leaning towards picking a domestic suitor with a commitment to turning around cash-strapped HMM.

"Several candidate companies have been shown interest in acquiring HMM," KDB Chairman Kang Seog-hoon said in a press conference in June. "Given the significance of HMM as a national shipper, we hope a company that is strongly committed to contributing to the Korean maritime industry through the acquisition, and that possess the necessary financial and managerial capabilities, becomes the acquirer."

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]