HMM sale to face hurdles amid slowdown in shipping industry
The sale of South Korea's No. 1 container shipper HMM, which is anticipated to be one of Korea's largest mergers and acquisitions for the second half of 2023, could hit a snag amid a slowdown in the shipping industry, according to industry sources on Sunday.
In November, state-owned Korea Development Bank, the largest shareholder of HMM, is reportedly scheduled to select its preferred bidder for the acquisition.
Earlier this month, acquisition candidates for HMM were narrowed down to a three-way race between Korean fisheries firm Dongwon Industries, food giant Harim and LX Group.
The acquisition deal will involve the HMM stake held by Korea Development Bank and Korea Ocean Business Corp. -- 20.69 percent and 19.96 percent, respectively, selling a total of 199 million shares via the process. Also, 200 million shares of HMM are scheduled to be additionally converted from perpetual bonds to be sold during the process.
Regarding the takeover deal, industry watchers say tumbling demand for maritime transport could weaken potential buyers appetite.
"Amid the global recession in the maritime transport industry, HMM's performance has been dwindling. With the acquisition of all of KDB's shares and Korea Maritime Development Corp.'s share in HMM expected to cost at least 5 trillion won ($3.6 billion), acquiring the company could work as a winner's curse at this timing," said a shipping industry official on the condition of anonymity.
As of Sept. 29, the Shanghai Containerized Freight Index, which calculates the fares of 15 of the most frequently used sea routes around the world and functions as a metric for demand in the maritime transport, shrank to 886.85, logging a 53 percent on-year decrease.
"The three highs -- high exchange rates, high interest rates and high prices -- are freezing consumer sentiment and decreasing maritime transport volumes overall," said another shipping industry official also on condition of anonymity.
Amid a global slowdown in the shipping industry, HMM's second-quarter numbers tumbled, with its quarterly sales logging 2.1 trillion won, posting a 57.7 percent on-year decrease. The company's operating profits logged 160 billion won, a 94.5 percent decrease from the same period last year.
"If HMM continues to post poor financial results, it could result in a decline in corporate value, and make it difficult to find a buyer. It is true that a low-cost acquisition may speedily end the M&A process, but sellers such as KDB and HMM's shareholders will not desire to sell the company at a low cost," she said.
(责任编辑:부모와 아이)
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