Harim Group vows to use HMM’s reserves to strengthen its global competitiveness

Harim Group, which was selected as the preferred bidder for the acquisition of HMM, said on December 26 that it will use the shipping company’s 10 trillion won worth of cash reserves to strengthen its global competitiveness.

Harim Group has made an explanation as public suspicions persist, such as that HMM’s reserves will be added to the acquisition fund of 6.4 trillion won through dividend.

“It is the group's firm belief that the cash assets held by HMM should be used to respond to the ongoing shipping recession and for future competitiveness,” the poultry company said in a statement. "Global shipping companies, such as MSC and Maersk, secured huge amounts of cash and are preparing for the shipping recession.”

Earlier, HMM's union argued that if Harim Group takes over the shipping company with a huge amount of borrowing, it will have no choice but to tap into HMM’s retained earnings worth of 10 trillion won.

Harim Group’s attempt to acquire HMM, which is bigger than itself, comes with lots of criticisms and concerns.

For now, Harim Group's assets are about 17 trillion won, which is less than HMM’s 26 trillion won, and the known acquisition price is 6.4 trillion won, raising concerns about the “Winner's Curse."

"In order to increase HMM's competitiveness in a situation where the recession is predicted, it would be desirable to minimize dividends," Harim Group said, adding, "In the past, there is a precedent of not paying dividends for five years after mergers and acquisitions to enhance the competitiveness of Pan Ocean."

The company also explained that the speculation surrounding a merger between Pan Ocean and HMM is not true. "There will be no merger or artificial adjustment of the business structure of Pan Ocean and HMM," said Harim Group. "Even before this agreement is signed, some people are speculating about a merger or restructuring, but we are not considering it at all."

Some speculate that Harim Group could use its profits from the development of the former cargo terminal site in Yangjae-dong, Seoul, where it is promoting its long-cherished project of constructing an urban high-tech logistics complex to finance the acquisition of HMM.

The poultry company purchased the former cargo terminal site for 45.25 billion won in 2016 and has been promoting the establishment of a logistics complex that includes logistics, residential, and cultural facilities. The total project cost alone amounts to 6.8 trillion won.

A staffer at Harim Group said, "The logistics complex in Yangjae-dong and the acquisition of HMM are separate projects.”

※This article has undergone review by a professional translator after being translated by an AI translation tool.