Harim Group Secures Majority Stake in HMM for USD 4.9 Billion
Seoul, South Korea – December 21, 2023
In a landmark victory, Harim Group, a leading South Korean food producer, has been designated as the preferred bidder in the acquisition of a majority stake in Hyundai Merchant Marine (HMM), the country’s largest container operator, as reported by Alphaliner.
The triumph comes after an intense and closely-watched bidding process, showcasing the prowess of Harim Group in the competitive South Korean shipping industry. Known for its poultry products and as the owner of dry bulk shipowner Pan Ocean, Harim Group clinched the bid with a slightly higher offer for the stake previously held by state-run entities Korea Development Bank (KDB) and Korea Ocean Business Corporation (KOBC).
The decision to select Harim as the preferred bidder stems from its proven track record in successful acquisitions, particularly its adept management of Pan Ocean, a strategic acquisition made in 2015. Additionally, the evaluation took into account Harim’s funding plan, aiming to secure a substantial self-financed amount of KRW 3.25 trillion through asset securitization and the issuance of perpetual bonds.
The Korean government, overseeing the sale, is set to divest 398.79 million shares in HMM, representing a substantial 57.9% shareholding. The anticipated deal value is an impressive KRW 6.4 trillion (USD 4.9 billion).
Harim Group’s winning bid was made in partnership with private equity firm JKL Partners, collectively forming the ‘Pan Ocean-JKL’ consortium. The Korea Development Bank has confirmed this consortium as the preferred bidder, and the sale is expected to conclude in the first half of 2024, contingent upon agreement on detailed terms.
A crucial component of Harim’s strategic vision involves seeking synergies between HMM and Pan Ocean. Pan Ocean, as Korea’s largest dry bulk operator with a fleet exceeding 110 owned ships, constitutes a significant 40% of Harim’s revenue. Harim envisions a well-rounded business portfolio, encompassing container, bulk carrier, and special ships, with the aim of navigating the challenges presented by the global freight recession.
This strategic approach differs from that of the rival bidder, Dongwon, a seafood group, which intended to capitalize on synergies between HMM and its own port and logistics facilities.
The conclusion of the bidding process followed a period of contention, marked by a formal complaint filed by Dongwon, alleging unfair demands in the sale terms by Harim. Earlier reports suggested that both bids were comparable, but Harim secured the winning edge with a slightly higher offer of KRW 6.4 trillion compared to Dongwon’s KRW 6.2 trillion. Harim plans to fund the acquisition through the sale of KRW 500 billion in perpetual bonds and a rights offering, solidifying its position in the dynamic maritime industry.