According to sources, the Federation of Korea Maritime Industries (FKMI) and the Busan Port Development Association (BPDA) have raised their voices in opposition to the bid made by foreign German liner operator Hapag-Lloyd to acquire South Korea’s flagship container carrier, Hyundai Merchant Marine (HMM).
The FKMI and BPDA, citing concerns over national economic and security implications, have joined forces to block Hapag-Lloyd’s attempt to gain control over HMM. They contend that allowing foreign control of such a pivotal national asset must be prevented at all costs. These industry organizations expressed their dismay, accusing the government of lacking awareness regarding the critical role of shipping in the country.
Korea Development Bank (KDB) and Korea Ocean Business Corp, collectively holding close to 40% of HMM’s shares, initiated the bidding process for their stake on July 20th. Additionally, KDB is in the process of converting some of its HMM convertible bonds into additional shares, which could potentially elevate the state’s ownership stake to 57.87%.
Bidding for HMM concluded recently, followed by an anticipated month-long period of due diligence. During this period, a preferred buyer is expected to emerge. Subsequent negotiations will then take place prior to the finalization of the sale contract.
FKMI and BPDA voiced their concerns, emphasizing the potential consequences of selling HMM to Hapag-Lloyd. They warned against the potential loss of invaluable national assets, including container transport resources, terminals, and the decades of accumulated industry know-how. Expressing their frustration, they questioned the inclusion of Hapag-Lloyd among the initial bidders. The organizations underscored HMM’s pivotal role in supporting South Korea’s export-driven economy by providing vital shipping services to the country’s exporters.
The joint statement by FKMI and BPDA reads: “In the name of the five million families who depend on the maritime industry, we urge that the sale of HMM to an overseas party be blocked to stabilize our country’s supply chain.”
Multiple contenders have entered the bidding arena, including South Korean logistics group LX Pantos, bulk carrier operator Pan Ocean’s parent company Harim Group, and deep-sea fishing and logistics conglomerate Dongwon Group. However, observers cast doubt on the government’s inclination to allow a foreign entity to take control of HMM. Hapag-Lloyd stands out as a robust contender, with substantial cash reserves exceeding $7 billion.
Meanwhile, Samra Midas Group, the parent company of HMM’s compatriot carrier SM Line, and apparel exporter Global Sae-A, decided against submitting bids, reportedly due to concerns about meeting the anticipated starting price, estimated at $3.8 billion.
The unfolding situation presents a critical juncture for South Korea’s maritime industry, as key stakeholders weigh the potential implications of a foreign takeover bid against the backdrop of economic and security considerations. The decision reached will undoubtedly shape the future trajectory of HMM and its role within the nation’s economic landscape.
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