Final lap for Hyundai Merchant Marine (HMM) Acquisition

Final lap for Hyundai Merchant Marine (HMM) Acquisition
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According to sources, LX International, the South Korean logistics-to-trading giant, has officially pulled out of the race to acquire a majority stake in carrier Hyundai Merchant Marine (HMM). The move narrows down the list of contenders to just two companies, seafood distributor Dongwon Industries and agri-food business Harim Group, in partnership with private equity firm JKL Partners.

LX’s withdrawal comes on the heels of disappointing Q3 financial results, raising concerns about its ability to secure the necessary capital for the acquisition. Shareholders of LX can breathe a sigh of relief, as fears of unmanageable capital requirements dissipate with the company’s exit from the bidding process.

The departure of LX means that Dongwon Industries and Harim Group, in collaboration with JKL Partners, will advance to the next stage of the competition. Kang Seok-hoon, chairman of HMM’s state investor Korea Development Bank (KDB), had earlier suggested that the sale could be finalized by the end of the year. Reports indicate that a preferred bidder might be announced as early as the end of this month.

Despite this progress, lingering concerns persist regarding the financial capabilities of Dongwon and Harim in relation to the substantial cost of acquiring HMM. Both companies would need to mobilize significant capital to meet the sale price, estimated to be at least KRW 6 billion and potentially exceeding KRW 7 billion if a premium is offered for a controlling stake.

As of the end of Q2, Dongwon and Harim reported cash assets of KRW 500 billion and KRW 1.6 trillion, respectively. The current share prices suggest a considerable financial commitment for the successful bidder. Notably, both Dongwon and Harim are reported to have submitted comparable financial offers in the latest round of bidding.

As the acquisition saga unfolds, industry insiders are closely watching the financial maneuvers of Dongwon Industries and Harim Group, anticipating a strategic move that could shape the future of Hyundai Merchant Marine. The stage is set for a decisive moment in the coming weeks, as the preferred bidder emerges in this high-stakes contest for control of one of South Korea’s major carriers.

Source: Alphaliner

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